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SIGNIFICANCE OF BUFFER OPERATOR IN

GREY PREDICTION APPROACH FOR DEMAND

FORECASTING IN SUPPLY CHAIN

Md. Sheikh Saad 15-02-07-065


Abu Naser Niloy 15-02-07-102
Naila Huq 15-02-07-137

DEPARTMENT OF MECHANICALAND PRODUCTION ENGINEERING

(MPE)

AHSANULLAH UNIVERSITY OF SCIENCEAND TECHNOLOGY (AUST)

DHAKA-1208, BANGLADESH

March, 2020
SIGNIFICANCE OF BUFFER OPERATOR IN

GREY PREDICTION APPROACH FOR DEMAND

FORECASTING IN SUPPLY CHAIN

By

Md. Seikh Saad 15-02-07-065


Abu Naser Niloy 15-02-07-102
Naila Huq 15-02-07-137

A Thesis Submitted to the

Department of Mechanical and Production Engineering,

Bangladesh University of Engineering and Technology

in Partial Fulfillment of the requirements for the Degree of

BACHELOR OF SCIENCE IN INDUSTRIAL AND PRODUCTION ENGINEERING

DEPARTMENT OF MECHANICAL AND PRODUCTION ENGINEERING (MPE)

AHSANULLAH UNIVERSITY OF SCIENCE ANDTECHNOLOGY (AUST)

DHAKA-1208, BANGLADESH

March, 2020

i
CERTIFICATE OF APPROVAL

The thesis entitled as “SIGNIFICANCE OF BUFFER OPERATOR IN GREY

PREDICTION APPROACH FOR DEMAND FORECASTING IN SUPPLY CHAIN”

submitted by the following students have been accepted as satisfactory in partial fulfillment of

the requirement for the degree of B.Sc. in Industrial and Production Engineering on

January,2019.

Md. Sheikh Saad 15.02.07.065


Abu Naser 15.02.07.102
Naila Huq 15.02.07.137

Mr. Amanat UR Rahman

Assistant Professor
Department of Mechanical and Production Engineering
Ahsanullah University of Science and Technology
Dhaka-1208, Bangladesh

Shah Ashiquzzaman Nipu

Assistant Professor
Department of Mechanical and Production Engineering
Ahsanullah University of Science and Technology
Dhaka-1208, Bangladesh

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DECLARATION OF CANDIDATE

It is hereby declared that this thesis or any part of it has not been submitted elsewhere for the

award of any degree or diploma.

15-02-07-065
Md. Sheikh Saad

Abu Naser Niloy 15-02-07-102

Naila Huq 15-02-07-137

iii
This work is dedicated to

Our Loving Parents & Our Families

ACKNOWLEDGEMENT

iv
First of all, the authors express their deepest gratitude toward the Almighty Allah, the most
beneficent and the most merciful for making them strong enough to complete this thesis
successfully.

The authors are sincerely indebted to their respected Thesis Supervisor Mr. Amanat Ur
Rahman, Assistant Professor, Department of MPE, AUST for his wholehearted supervision
during this full project. His understanding, guidance and instructions throughout the progress of
report preparing and writing have provided a good basis for this Thesis. Without his direction,
suggestions and assistance it would be impossible to complete this work. We also would like to
thanks Department of Mechanical and Production Engineering for allowing us to use all
available facilities.

Family has always been a very important source of support for the authors. Authors devote their
deepest gratitude to the parents for their love and support. Lastly, Authors offer thanks to all of
those who supported them in any respect during the research work.

v
ABSTRACT

Demand forecast plays a crucial role in Supply Chain Management. Competitive supply chain

performance depends on the appropriate demand forecasting. Here we study with grey prediction

model analyzes its characteristics regarding data set. Grey theory is one approach that can be

used to construct a model with limited samples to provide better forecasting advantage for short-

term problems. This theory demonstrates the optimal and unique ability of performing fitting

predictions using small data sets and limited information to allow fast, concise, accurate, and

effective predictions and understand future trends. This paper is focused on the development of

Grey based prediction model for prediction of future demand. The goal of this study is to

overcome the constraints of limited and uncertain datasets and establish a high-precision

forecasting model. Yet we observe the demand data of local pharmaceutical company comparing

it w ith the conventional GM (1,1) model along with the buffer operators. Strengthening and

weakening buffer operators are used to eliminate the shock or disturbance of the data set. The

comparisons show that prediction accuracy of the second order weakening operator is far greater

than that of the traditional GM (1,1) model. Hence, this paper hopes to fill the research gap of

buffer operator and successfully develop a forecasting model which could be used for future

time series prediction.

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TABLE OF CONTENTS

CERTIFICATE OF APPROVAL................................................................................................ii
DECLARATION OF CANDIDATE.........................................................................................iii
ACKNOWLEDGEMENT...........................................................................................................v
ABSTRACT................................................................................................................................vi
LIST OF TABLES....................................................................................................................viii
LIST OF FIGURES.....................................................................................................................x
LIST OF ABBREVIATIONS....................................................................................................xii
Chapter-1......................................................................................................................................13
Introduction................................................................................................................................13
1.1 OBJECTIVE..............................................................................................................................17
1.2 SIGNIFICANCE OF WORK...................................................................................................17
Literature review........................................................................................................................18
Chapter-3......................................................................................................................................22
MeTHODOLOGY.....................................................................................................................22
3.1 GREY PREDICTION MODEL...................................................................................................22
3.2 STEPS OF GREY METHOD......................................................................................................23
3.2.1 STEP 1: FIND THE DATA SEQEUNCE.............................................................................23
3.2.2 STEP 2: APPLY OPERATORS............................................................................................24
3.2.3 FORM OF WEAKENING OPERATOR..............................................................................24
3.2.4 FORM OF STRENTHENING OPERATOR.......................................................................25
3.2.5 STEP 3: OBTAIN ACCUMULATING GENERAL OPERATOR.....................................25
3.2.6 STEP 4: OBTAIN MEAN GENERATOR SEQUENCE.....................................................25
3.2.7 STEP 5: FINDING THE PERFORMANCE INDICATORS..............................................26
3.2.8 STEP 6: MEASURING ERROR...........................................................................................27
3.2.7 STEP 7: PREDICT THE VALUE FOR THE UPCOMING PREDIODS.................................27
3.3 ERROR ACCURACY TEST TABLE......................................................................................27
Chapter-4......................................................................................................................................28

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EMPIRICAL ANALYSIS.......................................................................................................28
4.1 CONSTRUCTION OF THE GM (1,1)...............................................................................................30
4.2 CONSTRUCTION OF THE BUFFER OPERATOR..............................................................................32
4.2.1. CONSTRUCTION OF THE STRENTHENING BUFFER OPERATOR...............................................32
7. 4.2.1 GRAPH & TABLE OF STRENGTHENING BUFFER OPERATOR FOR 1-AGO..........................34
4.2.2 GRAPH & TABLE OF STRENGTHENING BUFFER OPERATOR FOR 2-AGO..................................36
4.3 COMPARISON BETWEEN PREDICTIONS......................................................................................43
...............................................................................................................Error! Bookmark not defined.
Chapter-5......................................................................................................................................44
RESULT AND DISCUSSIONS..............................................................................................44
Chapter-6......................................................................................................................................48
CONCLUSION.........................................................................................................................48

LIST OF TABLES

Table Title Page No.


Error test requirement 25
Table 2 Monthly sales data 27
Table 3 Calculation of GM(1,1) 29
Table 4 Calculation of strengthening buffer operator 30

For 1-AGO data pattern


Table 5 Calculation of strengthening buffer operator 32

for 2-AGO data pattern


Table 6 Calculation of weakening buffer operator for 33

1-AGO data pattern


Table 7 Calculation of weakening buffer operator for 34

2-AGO data pattern

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Table 8 Mean Relative error of Strengthening Operator for 2- AGO data 35

pattern

Table 9 Calculate Table 10. Mean Relative error of Weakening Operator for 37

1- AGO data pattern

Table 10 Mean Relative error of Weakening Operator for 1- AGO data 38

pattern

Table 11 Calculation of Weakening Buffer operator for 2-AGO data pattern 39

Table 12 Mean Relative error of Weakening Operator for 2- AGO data 40

pattern

LIST OF FIGURES

.
Figure No. Figure Title Page No.

Fig 1 Sales data pattern 27

Fig 2 GM (1,1) data pattern 29

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Fig 3 1-AGO data pattern for Strengthening Buffer Operator 32
Fig 4 2-AGO data pattern for Strengthening Buffer Operator 34

Fig 5 1-AGO Data Pattern for Weakening Buffer Operator 37

Fig 6 2-AGO Data Pattern for Weakening Buffer Operator 39


Fig 7 Comparison between 1-AGO data pattern for Strengthening Buffer 41
Operator and actual data

Fig 8 Comparison between 2-AGO data pattern for Weakening Operator 42


& actual data

Fig 9 Comparison between actual sales and forecasted data by GM (1,1) 43

Fig 10 Comparison between 1-AGO data pattern for Strengthening Buffer 44


Operator & actual data

Fig 11 Comparison between 2-AGO data pattern for Strengthening Buffer 45


Operator & actual data

Fig 12 Comparison between 1-AGO data pattern for Weakening Buffer 45


Operator and actual data

Fig 13 Comparison between 2-Ago data pattern for Weakening Buffer 46


operator and actual data

x
xi
LIST OF ABBREVIATIONS

Symbol Description
SC Supply Chain
ANN Artificial Neural Network
GM Grey Model
CNKI China National Knowledge Infrastructure
AGO Aggregate Generator operator
IAGO Inverse Accumulating Generator Operator
ARIMA Auto-Regressive integrated moving average
MLP Multi-Layer Perception

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Chapter-1

INTRODUCTIO

Supply chain management is the art of management of providing the right product, at the

right time, right place and the right cost to the customer. Supply chain management (SCM)

research has developed rapidly in the past two decades(Kovács & Spens, 2020). So, for the

competitive supply chain performance better forecasting model is needed to predict the future

demand, inventory holding system and for just time availability of raw material. Supply

Chain Management encompasses the planning and management of all activities involved in

sourcing and procurement, conversion, and all Logistics Management activities. Importantly,

it also includes coordination and collaboration with channel partners, which can be suppliers,

intermediaries, third-party service providers, and customers. In essence, Supply Chain

Management integrates supply and demand management within and across companies. The

effectiveness of supply chain depends on primarily on the accuracy of prediction for product

sales, while the efficiency of the supply management optimization relies on the accuracy of

forecast for the final product sales.

Demand forecasting is one of the main issues of supply chains. It aimed to optimize stocks,

reduce costs, and increase sales, profit, and customer loyalty(Geng et al., 2019). Demand

prediction is that the method of prediction of future statistic supported past knowledge.

Demand foretelling involves quantitative strategies like the utilize of information and

especially historical sales data, as well as statistical techniques from test markets.  Excessive

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stocks (overstock) and out-of-stock (stock outs) are very serious problems

for retailers. Excessive stock levels can cause revenue loss because of

company capital bound to stock surplus. Excess inventory can also lead to

increased storage, labor, and insurance costs, and quality reduction and

degradation depending on the type of the product. It seems that retail

industry will face more competition in future. Therefore, the usage of

technological tools and predictive methods is becoming more popular and

necessary for retailers.(Kilimci et al., 2019). If customers cannot find products at

the shelves that they are looking for, they might shift to another competitor or buy substitute

items more specially when it is local pharmaceutical products. The fashion retail industry, the

sales data stored in the point-of-sales (POS) systems are always not comprehensive and

scattered due to various reasons(Xia & Wong, 2014). So predicting demand is a highly

sophisticated issue. Demand is primarily depending on two models. They are Qualitative

demand and Quantitative demand. While Demand forecast accuracy is the process of

determining the accuracy of forecasts made regarding customer demand for a

product. Understanding and predicting customer demand is vital to manufacturers and

distributors to avoid stock-outs and maintain adequate inventory levels. While forecasts are

never perfect, they are necessary to prepare for actual demand. In order to maintain an

optimized inventory and effective supply chain, accurate demand forecasts are imperative

(C.-C. Hsu & Chen, 2003).

Among all of the demand prediction methods Grey prediction method is the best suitable

when there is high demand uncertainty and few available data. The grey system theory is

fairly appropriate for prediction. Grey systems theory looks at each stochastic variable as a

grey quantity that varies within a fixed region and within a certain time frame and each

stochastic process as a grey process(Sifeng Liu, Yingjie Yang, 2016). It was sooner initiated

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by a Chinese Professor Julong Deng in 1982(Lababidi et al., 2004). It established a relatively

new approach for addressing poorly defined problems with a high level of greyness or

uncertainty. Grey system is one between white system and black system. White system is a

system with completely known internal characteristic and system information is perfectly

sufficient. However, black system is the system with totally unknown internal information

The theory empowers one to model, analyze, monitor, and control such partially defined

systems by generating, excavating and extracting useful information from a small set of

data(Tseng et al., 2001). ‘The Grey Control System’ which was published in journal of

Huazhong University of Technology. After publishing these two papers, Grey theory receives

positive attention among the researchers both at home and abroad. As a result, about 15,000

grey paper was retrieved from Chinese academic periodical database in China National

Knowledge Infrastructure (CNKI) from 1982 to June in 2006.

The accumulated generating operation is the most important characteristic for the grey system

theory and its purpose is to reduce the randomness of data. A non-negative smooth discrete

function can be transformed into a sequence having the approximate exponential law which is

the so-called grey exponential law(Xie & Liu, 2005). The grey theorem demonstrates the

optimal and unique ability performing, fitting predictions using small data sets and limited

information to allow fast, concise, accurate and effective prediction and understand future

trends.

The main feature of grey theory is its capability of using as few as four data items to forecast

the future data. The GM has the following advantages: (a) It can be used in situations with

relatively with limited data down to as little as four observations. (b) Just a few discrete data

are sufficient to characterize an unknown system. (c) It is suitable for forecasting in

competitive environments where decision-makers only have access to limited historical data.

Moreover, three residual modification models were applied to enhance the GM models(L.-C.

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Hsu, 2003). It is proved that UIRGM (1,1) determines the exact turning point, and the fitting

and prediction results are acceptable(H. Zhang et al., 2003). The GM(1,1) model within the

grey theory is used frequently by scholars as a prediction tool (Chen & Huang, 2013)

Traditional GM (1,1) is a fundamental prediction model based on the grey theory. GM is

formed by the initial letters of the grey model; regarding (1.1), the first 1 means that the

prediction model only consists of a 1-step equation and the second 1 means that there is only

one dependent variable in the model. As such, GM (1.1) is based on the premise that 1-step

equation and 1 dependent variable are satisfied. In 2009, Sifeng Liu and colleagues

determined four kinds of GM(1,1) basic models including the even GM(1,1) model, discrete

GM(1,1) model, even difference GM(1,1) model, and original difference GM(1,1) model(Xie

& Liu, 2005). Such models were determined through simulation experiments, which helped

to determine suitable types of sequences for the different models (L. Zhang et al., 2007).

In the Grey periodic sequence, due to uncontrollable shocks, the data that is obtained may

evolve too quickly or slowly, and not actually represent the true changes in the system over

time. In order to solve the prediction problem of the shock disturbed system, Sifeng Liu put

forward the concept of the buffer operator, built up the axioms system of the buffer operator

and constructed several practical buffer operators. Conclusion draw from those sequence may

not be usable to build models or to make predictions as a result. In such a cases, to eliminate

the interference of shock, it is necessary to apply strengthening sequence operator or

weakening sequence operators, so that the accuracy can be improved(Rajesh, 2016).

The grey prediction has been widely used in engineering sciences, social

sciences, agriculture, procreation, power consumption, management as well as other

16
fields(Alonso-Ayuso et al., 2003).  Damp Trend Grey Model (DTGM) with a dynamic

seasonal damping factor to forecast routes passengers demand (pax) in the air transportation

industry. The model is called the SARIMA Damp Trend Grey Forecasting Model (SDTGM)

(Carmona-Benítez & Nieto, 2020). In the natural world, uncertain systems with small

samples and poor information exist commonly. That fact determines the wide range of

applicability of grey systems theory

1.1 OBJECTIVE

The objective of this research are as follows:

 Study of demand data of local pharmaceutical company of Bangladesh.

 Application of GM (1,1) model for demand prediction.

 Application of buffer Operator on source data sequence.

 Analysis of the impact of buffer operator based on error analysis.

1.2 SIGNIFICANCE OF WORK

The vows of this research is to analysis the yearly sales data of a pharmaceutical company.

Here sales data are tested with improved Grey model. Then to reduce randomness or shock of

the data strengthening and weakening buffer operators are used, which tend to obtain more

accurate demand prediction.

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Chapter-2

LITERATURE REVIEW

Customers always expect the correct product assortment and quantity to be delivered, at right

time which determines the effectiveness of good supply chain. For this effectiveness accurate

forecast for upcoming demand is must. With the progress of technology and globalization,

competition has risen and so has the need to optimize the Supply Chain(Mentzer et al., 2001).

More enterprises are now focusing on supply chain efficiency in order to increase its profit

margin and customer satisfaction(Visser et al., 2020).

Effective supply chain management (SCM) has become a potentially valuable way of

securing competitive advantage and improving organizational performance since competition

is no longer between organizations, but among supply chains(S. Li et al., 2006).Demand

forecasts play a crucial role for supply chain management. The future demand for a certain

product is the basis for the respective replenishment systems(Aburto & Weber, 2007).

Turbulent and volatile markets are becoming the norm as life cycles shorten and global

economic and competitive forces create additional uncertainty(Aburto & Weber, 2007). He

and Zhang (He & Zhang, 2008), Zimmer (Zimmer, 2002) and Lababidi et al (Lababidi et al.,

2004) studied uncertain supply yields, along with risk-sharing contracts and coordinating.

Harrison and Hoek described the supply chain management as a plan and control all of the

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processes that link partners in a supply chain together in order to meet end-customers’

requirements(Watters, 2007).

Xin-li classified the forecasting methods as chaos and nonlinearity investigation, regression

analysis, time series, grey theory, and Markov analytical approaches (Xin-li, n.d.). According

to Xia and Wong, current forecasting techniques are generally divided into two groups:

classical methods based on mathematical and statistical models using artificial intelligence

techniques including artificial neural networks (ANN) and evolutionary computation (Xia &

Wong, 2014). Xin-li classified the forecasting methods as chaos and nonlinearity

investigation, regression analysis, time series, grey theory, and Markov analytical approaches

(Guan-Jun, 2000). More advanced time series methods such as auto-regressive integrated

moving average (ARIMA) and Winters method were developed. But where there is high

demand uncertainty and low data available Grey Prediction model is one of the commonly

used(Yao et al., 2009).

The system with partial unknown structure, parameters, and characteristics is called a grey

system. The grey theory can be employed to improve the control performance of a system

without sufficient information or with highly nonlinear property(Huang & Huang,

2000).Grey system theory believes that a system possesses overall functions and properties

even if the expression of such an objective system might be complicated and its data chaotic.

Therefore, there must be internal laws governing the existence of the system and its

operation. The key is to choose an appropriate method to excavate the internal laws and make

use of such laws. For any given grey sequence, its implicit pattern can always be revealed

through the explicit randomness(Holmgren et al., 1973). Grey theory is an approach that can

be construct a model with limited sample to provide better forecasting advantage for short

term problems(Tien, 2012). The specific feature of establishing a grey model is employing

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discreate-time sequence data to build up a first-order ordinary differential equation. During

this operation, the accumulated generating operation (AGO) and inverse accumulated

generating operation (IAGO) are the basic tools for searching Grey model(Beh et al., 1999).

Generally, the GM (1,1) and discrete GM (1,1) are two typical grey forecasting model in grey

theorem. However there are two shortcomings in the above model respectively, i.e. the

homogeneous exponent simulative deviation in GM (1,1) model and the unequal conversion

between the original and white equations in DGM (1,1) model(Zhou & He, 2013). As a

superiority to conventional statistical models, grey models require only a limited amount of

data to estimate the behavior of unknown systems(Kayacan et al., 2010). Others, such as the

uncertain supply cost, uncertain supply capacity, uncertain supply lead times, are also

addressed in papers(Alonso-Ayuso et al., 2003). However, the lack of ability of conventional

analysis methods to forecast time series that are not smooth leads the scientists and

researchers to resort to various forecasting models that have different mathematical

backgrounds (Kayacan et al., 2010). Investors have been trying to find the way to predict

stock prices accurately, but have had less than successful result. One problem with predicting

stock rate is that there may be a large or small difference in two continuous sets of data (Y. F.

Wang, 2002). The grey prediction is used to predict the tendency of RSSI (received signal

strength indicator), and we also designed dynamic triangular (DTN) location method(Luo et

al., 2005).  A non-equal interval non-homogeneous exponential grey model NNGM (1, 1) for

cumulative plastic deformation has been put forward by improving the traditional grey model

GM (1, 1)(Ren et al., 2012). Simulation results show that the grey model is capable of

forecasting short-term electricity price efficiently and accurately(Lei & Feng, 2012). Results

show the new model has the best simulative and predictive precision. This model is used to

forecast China's natural gas demand during 2015–2020(Zeng & Li, 2016).

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The grey forecasting model has been successfully applied to finance, physical control,

engineering, economics, etc. (Tseng et al., 2001). GM(1,1) is a fundamental prediction model

based on grey theory(Mao & Chirwa, 2006). This model is vastly used in numerous sectors.

Li, Chang, Chen, & Chen applied GM(1,1) model for forecasting short term electricity

consumption (D. Li et al., 2012). Lin & Yang used this model for the forecast of output value

of Taiwan’s opto-electronic industry (C. Lin & Yang, 2003). For modeling and forecasting of

CO2 emissions, energy consumption, & economic growth in Brazil Pao & Tsai have applied

this model (Pao & Tsai, 2011). Liu, Peng, Bai, Zhu & Liao applied GM(1,1) for tourism

flows prediction (Liu et al., 2014). Wang, Dang, Li, & Liu (Y. Wang et al., 2010) and Lin &

Lee (Y. Lin & Lee, 2007) have tried to improve the GM(1,1) prediction accuracy Samvedi

and Jain used grey prediction model in the supply chain(Z. X. Wang et al., 2008). They

compared the model with moving average, weighted moving average methods and

exponential smoothing during disruptions and stable situations in the supply chain(Samvedi

et al., 2013)  The model that is built is applied to fit and predict element concentration as

determined by oil spectrometric analysis(Krahn et al., 1992). It is proved that UIRGM (1,1)

determines the exact turning point, and the fitting and prediction results are acceptable(H.

Zhang et al., 2003). Interesting observation that has come from the study is that UK and US

experience similar phases in the time-dependent trend of motor vehicle fatality risk despite

the different perception of safety between the USA and UK(Mao & Chirwa, 2006)

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Chapter-3

METHODOLOGY

3.1 GREY PREDICTION MODEL

Grey prediction model is most adaptable approach to figure out future with a little

information. Fundamentally, it produces a numerical model for forecasting a future esteem.

The future esteem is forecasted on the information based on the previous and current data.

Grey system theory (GST) has transformed into a persuasive approach under discreet little

and insufficient information to address problems within high vulnerability circumstances. A

system which contains completely known information is called white system. On the other

hand, a system which contains completely unknown information is called black system. Here,

in this model, it provides consolidation between white and black ones. Because of this vivid,

it is called Grey prediction model.

It is persistently being hard to forecast the behavioral of an issue influenced by staggering

disrupting impact. That is the reason it is basic to pick the right model to foresee what's to

come. Without this, the theory will lose its authenticity. As a result, it can no longer

veraciously reflect the law of chance of the system. In order to get the true state of the

system’s behavioral data, shocks need to be eliminated. This is the best approach to enhance

the precision of the subsequent forecast. That is the reason buffer operator is utilized. Buffer

operator is denoted by ‘D’. If the raw data sequence is denoted by ‘X’ then ‘XD’ is called

buffer sequence.

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Buffer operators are two types. One is weakening operator and other is strengthening

operator. Weakening operator is those in which the buffer sequence ‘XD’ increases,

decreases or fluctuates slower or with small amplitude, respectively than the original

sequence X, then D is called as weakening operator. On the other hand, if buffer sequence

‘XD’ increases, decreases or fluctuates faster or with larger amplitude, respectively than the

original sequence X, then D is called as strengthening operator.

Besides this two there is another sort of operator for forecasting. It is called average operator.

This operator is utilized when there is a little information accessible for the count. All things

considered at, to begin with, ascertaining the normal esteem at that point determining what's

to come. Assume that, Y = (y(1), y(2), . . . . . . .,y(k), y(k+1), . . . . . . . , y(n)). Here, y(k) is

referred

to the preceding value where x(k+1) is the succeeding value. If x(n) is the new information

for any k ≤ n-1, then n(k) will be seen as a piece of old information.

But if the sequence Y has a blank entry at location k, denoted ∅(k), then the entries y(k-1)

being the preceding boundary and y(k+1) the succeeding boundary. If y(k) is referred to as an

internal point of the interval [ y(k-1), y(k+1)].

Aggregate Generator Operator (AGO) plays a suited role in Grey course of action modelling.

With this operator, it is very facile to denude a development proclivity subsisting in the

process of aggregating Grey quantities. It permits the qualities turbulent unique information

to be adequately uncovered. The procedure of forecasting using the Grey Prediction Model is

shown below.

3.2 STEPS OF GREY METHOD

3.2.1 STEP 1: FIND THE DATA SEQEUNCE

The original data sequence is denoted by y(0)= (y(1), y(2), y(3)….,y(n)) ……(1)

23
where ‘n’ is the number of months observed.

3.2.2 STEP 2: APPLY OPERATORS

Data will face many problems like they can respond too early or late or over time they can’t

represent the actual value which is changed at a particular time. To avoid this kind of

problems, it is necessary to apply strengthening or weakening operators.

Strengthening or weakening operator can express as:

yD = (y (1)d, y (2)d, y (3)d…………. y (n)d) ………… (2)

Here, D will be a strengthening operator if:

y(k)d ≤ y(k); k = 1,2,3…. N…….. (3)

D will be a weakening operator if:

y(k) ≥ y(k); k = 1,2,3…...…n….. (4)

The basic difference between strengthening and weakening operators is, for strengthening

operator’s data will shrink for the monotonically increasing or decreasing function. On the

other hand, for weakening operator’s data will expand.

3.2.3 FORM OF WEAKENING OPERATOR

Given a raw data sequence Y= (y (1), y (2) …y(n), let YD = (y (1)d, y (2)d …y(n)d), where

1
y(k)d= [y(k)+y (k+1) +…..+y(n)] , k =1,2,3……….. (5)
n−k +1

Normally D is weakening operator whereas Y is a monotonic, increasing, decreasing or

vibrating sequence. This operator is also called an average weakening buffer operator

(AWBO). This weakening operator is widely used in application of prediction of systems

with interference of uncontrollable shock waves and different mode.

24
3.2.4 FORM OF STRENTHENING OPERATOR

Assume that Y = (y (1), y (2), …. y(n)) is raw data sequence and YD = (y (1)d, y (2)d ,…

y(n)d),where D is :

y ( 1 ) + y ( 2 ) +…+ y ( k −1 )+ ky ( k )
y(k)d= ; k = 1,2, …, n-1………. (6)
2 k−1

If y(n)d = y (n), then D is a strengthening buffer operator where the raw data sequence Y is

monotonic, increasing or decreasing sequence.

If the raw data sequence Y is increasing or decreasing the operator D is defined as:

[ y ( k ) + y ( k +1 ) +… y ( n ) ] ∕ ( n−k +1 )
y(k)d = ; y(k); k = 1,2, … n.…….. (7)
y (n )

Here D is a strengthening operator and it is also called as average strengthening buffer

operator (ASBO)

Buffer operator is using in different sectors. Not only in grey model but also in other model

building. Based on qualitative analysis and conclusion, this strengthening and weakening

operator is used on original data sequence before start building mathematical model. This

model is used to soften or eliminate the effect of shock-disturbance on the behavior sequence

of a given system. With the use of these operators expected results are obtained

3.2.5 STEP 3: OBTAIN ACCUMULATING GENERAL OPERATOR

The Aggregate Generator Operators (AGO) can be defined as:

~y(1) = (~y(1)(1),~y(1)(2), y (1) (3) …….,~y(1)(n)) ………… (8)

k
( 0)
where, ~y(1)(k) = ∑ ~y (i); k = 1,2,3……, n………… (9)
i=1

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3.2.6 STEP 4: OBTAIN MEAN GENERATOR SEQUENCE

The Mean Generator Sequence can be defined as:

Ẏ =¿(1), ẏ (1) (2), ẏ (1 )( 3)……., ẏ (1) (n)………… (10)

y ( 1) (k )) + (0.5× ~
Where, ẏ (1) (1) = ((0.5× ~ y ( 1) (k −1))); k =2,3….. n ...… (11)

And then ẏ (1) (2) can be represent the indicator for the second periods after applying the

second-order weakening operator and the mean generator operator.

3.2.7 STEP 5: FINDING THE PERFORMANCE INDICATORS

Using the Grey prediction model, simulate the data value the establish the Y and B matrices.

y ( 0) (2) − ẏ ( 1) ( 2 ) 1

[]
y (0 ) (3)
(0 )
Y = y ( 4)
:
:
(0 )
y (n)
;

[ ]
− ẏ ( 1) ( 3 ) 1
(1 )
B = − ẏ ( 4 ) 1
:
:
(1 )
− ẏ ( n ) 1

d~
y (1)
Let, + a~y(1) = d,
dt

Using least square method c and d can be obtained as:

c^c^ = [c,d]T …………(12)

where, a^ represent the parameters as:

c^ = ([BTB]-1BTY)………… (13)

After we get,

c^ = ¿ …………(14)

Finding a, b then the sequence for GM (1,1) is as:

26
d −ck d
^y (1)(k+1) = ([ y (0 )- ( )]e +( )];k = 0,1,2,3 ……., n-1…………(15)
c c

^y (0)(k+1) = ^y (0)(k+1) - ^y (1)(k)…………(16)

3.2.8 STEP 6: MEASURING ERROR

Measuring the error then calculate the accuracy of the model. The errors are calculated as:

ε (0) = (ε (0(k)¿nk=1 …………(17)

where, ε (0) = (y(0)(k) -^y (0)(k))…………(18)

with the sequence of relative errors,

∆ = (δ k¿nk=1 …………(19)

δk =
|ε (0 )(k )|
where, …………(20)
~y (0 ) (k )

1 n
with the mean relative error, ∆ = (∑ δ i)…………(21)
´
n i=1

3.2.7 STEP 7: PREDICT THE VALUE FOR THE UPCOMING PREDIODS

After checking the errors, Grey model can be easily applied into the strengthening or

weakening equation and get the prediction value for the next m periods via:

^y (0) = (^y (0)(i)¿ni=n


+m
………… (22)

3.3 ERROR ACCURACY TEST TABLE

Table 1. Error test requirement

Level Average Relative Error

(ARE)
1 0.01
2 0.02
3 0.03

27
4 0.04
5 0.05
6 0.10

Chapter-4

EMPIRICAL ANALYSIS

In order to prove the analogy of the given strategies, the sales information of a known

pharmaceutical company of Bangladesh has been considered. The name of the company has

been kept undisclosed because of classification. The company is looking for a perfect and

dependable prediction model thinking about the high uncertainty in the market. The board is

hoping to find a new model gave that the prediction is approximately accurate. This will be

done by utilizing the sales information of a year. Use of buffer operator in The Grey

prediction model is applied for future time series prediction. The adequacy of the model can

be legitimized in the wake of performing accuracy and error analysis. The sales information

of a recently propelled item is appeared Table 2. Additionally, the example of information is

found in Figure 1.

Table 2. Monthly sales data

28
First order Second order

Month Time Sales data of sales data of sales


January 1 505835 505835 505835
February 2 640225 595428 902787
March 3 604970 592194 1456580
April 4 543862 560905 2013974
May 5 496862 531030 2549372
June 6 454326 501607 3058984
July 7 512918 525882 3570155
August 8 471113 501858 4080527
September 9 466485 495791 4577205
October 10 583225 554148 5102175
November 11 672659 603764 5680923
December 12 621762 583199 6272707

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0
Nov-10 Jan-11 Feb-11 Apr-11 Jun-11 Jul-11 Sep-11 Nov-11 Dec-11

Figure 1. Sales data pattern

4.1 CONSTRUCTION OF THE GM (1,1)

The development of the GM (1,1) model for demand prediction (Table 2) is discussed in the

following steps.

1. The sales information from Table 2 are taken as input for the y (0) and the aggregate

sequence (~y (1)) is setup (Figure 3). The outcome is a repetitive increasing sequence

that consents to the first order linear ordinary differential equation.

29
2. The quasi-smoothness of y(0)(k) and quasi-index pattern of ~y (1)(k) is checked. For k>2,

if p(k) <0.5 and σ (1) (k ) ϵ [1, 1.5] the requirement of quasi-smoothness and quasi-index

pattern is satisfied.

3. Matrix B is generated by the values of ẏ (1) ( k ) and matrix Y values are acts as the

original data sequence.

4. These matrices (B and Y) are used to solve the Differential equation using the

‘LINEST’ function in MS Excel and obtain the values of ‘a’ (developing coefficient)

and ‘b’ (grey input).

5. The values are then put into the equation no. 10 which is also called the whitening

equation and get the corresponding Y^(1 )


(k ).

6. The prediction sequence is retrieved by inversing the operation done in AGO

sequence which are shown in Table3.

800000

700000

600000

500000

400000
Sales

300000

200000

100000

0
0 2 4 6 8 10 12 14

Month

Fig.02

Table 3. Calculation of GM (1,1) data pattern

30
σ (1) (i)
Tim
^
s( 0) ~s(1 ) ^ S(0) (1)
(1)
Ẇ (1) S(1 ) (1)
e c (1)
50583 505835 - - - 50583 505835
1 5
64022 1146060 1.2657 2.265 -825947.5 1044843.3768 539008.377
2 5 7
60497 1751030 0.5279 1.527 -1448545 1586346.5586 541503.182
3 0 9
54382 2294856 0.3106 1.310 -2022943 2130356.0924 544009.534
4 6 6
49686 2791718 0.2165 1.216 -2543287 2676883.5791 546527.487
5 2 5
45432 3246044 0.1627 1.162 -3018881 3225940.6729 549057.094
6 6 7
51291 3758962 0.1580 1.158 -3502503 3777539.0822 551598.487
7 8 0
47111 4230075 0.1253 1.125 - 4331690.5694 556716.382
8 3 3 3994518.5
46648 4696560 0.1103 1.110 - 4888406.9515 559293.149
9 5 3 4463317.5
58322 5279785 0.1242 1.124 - 5447700.1002 551598.409
10 5 2 4988172.5
67265 5952444 0.1274 1.127 - 6009581.9421 561881.842
11 9 4 5616114.5
62176 6574206 0.1045 0.104 -6263325 6574064.4588 564482.517
12 2 5

Table 4. Mean Relative error of GM (1,1)

Time ^ ^ ∆´
ε (0) (1) e (i)
1 0.000000 0.00000
2 101216.6232 0.1518
3 63466.8183 0.1049
4 -183.5339 0.0003
5 -49665.4866 0.1000
6 -94731.0938 0.2085
7 -38680.4093 0.0754 10.9563%
8 -83038.4872 0.1763
9 -90231.3821 0.1934
10 23931.8513 0.0410
11 110777.1582 0.1647
12 57279.4832 0.0921

31
In the table 4, here is the calculation for GM (1,1). A brief calculation can get by putting

these data in excel and this is how forecast is done with GM (1,1) model. The average

relative error here is 10.9563% and average relative accuracy is 89.044%.

4.2 CONSTRUCTION OF THE BUFFER OPERATOR

4.2.1. CONSTRUCTION OF THE STRENTHENING BUFFER OPERATOR

The development of the use of Strengthening buffer operator in GM (1,1) for demand

prediction (Table 2) is discussed in the following steps.

1. The sales information from Table (2) are taken as input for equation 5, equation (6)
(0)
and equation (7) and get the first and second order data which are taken input for s
~
and the aggregate sequence ( S (1)). The outcome is a repetitive increasing sequence that

consents to the first order linear ordinary differential equation.

2. The first order weakening operator was applied to equation (2-4) for the indicators to

smooth their values. Then a second order weakening operator was applied to equation

(5) to further smooth the data values correspond to AGO sequence in table (4-7).

3. The first aggregate generator sequence was obtained for the indicators from equation

(8) and (9). The data values correspond to the AGO sequence in Table (4) and (6).

4. The mean generated sequence of the data was obtained from Equation (10) and (11).

Their values are in table 4-7.

32
5. The error sequence was estimated using equation (17-21). The values of the estimated

and relative errors are shown in table (8).

6. The generated time response sequence of simulated values of the resilience indicator

from equation (22).

7. 4.2.1 GRAPH & TABLE OF STRENGTHENING BUFFER OPERATOR FOR

1-AGO

700000

600000

500000

400000
Sales

300000

200000

100000

0
0 2 4 6 8 10 12 14

Month

Fig.03 1-AGO data pattern for Strengthening Buffer Operator

Table 5. Calculation of Strengthening Operator for 1- AGO data pattern


Tim σ (1) (i)

s( 0) ~s(1 )
^
^
S(0) (1)
e Ẇ (1) (1) S(1 ) (1)
c (1)
50583
1 5 505835 - - - 505835 505835
59542 2.177
2 8 1101263 1.1771 1 -803549 1060522.4195 554687.419
59219 1.537
3 4 1693457 0.5377 7 -1397360 1614190.0518 553667.632
4 56090 2254362 0.3312 1.331 - 2166839.7718 552649.720

33
5 2 1973909.5
53101 1.235
5 8 2785380 0.2356 6 -2519871 2718473.4509 551633.679
50160 1.180 -
6 7 3286987 0.1801 1 3036183.5 3269092.9571 550619.506
52588 1.160
7 2 3812869 0.1600 0 -3549928 3818700.1549 549607.198
50185 1.131
8 8 4314727 0.1316 6 -4063798 4367296.9045 548596.751
49579 1.114 -
9 1 4810518 0.1149 9 4562622.5 4914885.0665 547588.161
55414 1.115
10 8 5364666 0.1152 2 -5087592 5461466.4922 546581.426
60376 1.112
11 4 5968430 0.1125 5 -5666548 6007043.0335 545576.541
58319 1.097 -
12 9 6551629 0.0977 7 6260029.5 6551616.5379 544573.504

Table 6. Mean Relative error of Strengthening Operator for 1- AGO data pattern

Time ^
ε (0) (1)
^
e (i) ∆´
1 0.000000 0.00000
2 40740.5805 0.0684
3 38526.3677 0.0651
4 8255.2800 0.0147
5 -20615.6791 0.0388
6 -49012.5062 0.0977
7 -23725.1978 0.0451 5.864%
8 -46738.7506 0.0931
9 -51797.1610 0.1045
10 7566.5743 0.0137
11 58187.4587 0.0964
12 38625.4956 0.0662

In this table 6, here is the calculation for strengthening operator with first order data. Forecast

is done by first Order data and the average relative error is 5.864%. The average relative

accuracy is 94.136%.

34
4.2.2 GRAPH & TABLE OF STRENGTHENING BUFFER OPERATOR FOR 2-AGO

Fig.04 2-AGO data pattern for Strengthening Buffer Operator

Table 7. Calculation of Strengthening Buffer operator for 2-AGO data pattern


Tim σ (1) (i)

s( 0) ~s(1 )
^
^
S(0) (1)
e
(1)
Ẇ (1) S(1 ) (1)
c (1)

1 505835 505835 - - - 505835 505835


595428 1101263 -803549 1060522.4195
2 1.177 2.1771 554687.41
3 592194 1693457 -1397360 1614190.0518
0.537 1.5377 553667.63
2166839.7718
4 560905 2254362 552649.72
0.331 1.3312 -197399.5
5 531018 2785380 -2519871 2718473.4509
0.235 1.2356 551633.67
3269092.9571
6 501607 3286987 550619.50
0.180 1.1801 -303613.5
7 525882 3812869 -3549928 3818700.1549
0.16 1.160 549607.19
8 501858 4314727 -4063798 4367296.9054
0.13 1.131 548596.75

35
9 495791 4810518 4914885.0665
0.11 1.114 -456262.5 547588.16
10 554148 5364666 -5087592 5461466.4922
0.11 1.115 546581.42
11 603764 5968430 6007043.0335
0.11 1.112 -5666548 545576.54
12 583199 6551629 0.09 1.097 -626029.5 6551616.5379 544573.50

Table 8. Mean Relative error of Strengthening Operator for 2- AGO data pattern

Time ^
ε (0) (1)
^
e (i) ∆´
1 0.000000 0.0000
2 -739398.7307 0.8190
3 -436620.0530 0.2998
4 -168608.8673 0.0837
5 33173.0567 0.0130
6 158174.4973 0.0517
7 225945.7539 0.0633 12.8706%
8 225142.6766 0.0552
9 132510.5485 0.0290
10 -21907.8696 0.0043
11 -226395.3863 0.0399
12 -537567.4246 0.0857

In this table 8, here is the calculation for strengthening operator with Second order data

Forecast is done by second Order data and the average relative error is 12.8706%. The

average relative accuracy is 87.129%.

4.2.4 STEP 2: CONSTRUCTION OF THE WEAKENING BUFFER OPERATOR

The development of the use of Weakening buffer operator in GM (1,1) for demand

prediction (Table 2) is discussed in the following steps.

36
1. The sales information from Table (2) are taken as input for equation (5) and get the
(0)
first and second order data which are taken input for n and the aggregate sequence (
~(1)
N ). The outcome is a repetitive increasing sequence that consents to the first order

and second order linear ordinary differential equation.

2. The first order Weakening operator was applied to equation (2-4) for the indicators to

smooth their values.

3. The first aggregate generator sequence was obtained for the indicators from equation

(8) and (9). The data values are corresponded to the AGO sequence in Table (9) and

(11).

4. The mean generated sequence of the data was obtained from Equation (10) and (11).

Their values are in table (8) and table (10).

5. The error sequence was estimated using equation (17-21). The values of the estimated

and relative errors are shown in table (8) and table (10).

6. The generated time response sequence of simulated values of the resilience indicator

from equation (22).

4.2.3 GRAPH & TABLE OF WEAKENING BUFFER OPERATOR FOR 1-AGO

37
Fig.05 1-AGO Data Pattern for Weakening Buffer Operator

Table 9. Calculation of Weakening Buffer operator for 1-AGO data pattern


Tim σ (1) (i)

n( 0) ~
n(1) ^
^
N (0 ) (1)
(1)
Ẇ (1) N (1 ) (1)
e c (1)

1 547850 445704 - - - 505835 505835

2 551670 997374 -721539 1027705.1725

1.237 2.237 521870.17


3 542814 -1268781 1559643.7959

154018 0.544 1.544 531938.62


4 535908 -1808142 2101845.1211

207609 0.347 1.347 542201.32


5 534918 -2343555 2654507.1465

261101 0.257 1.257 552662.02


6 540355 3217831.6907
-288191.5
315136 0.207 1.207 563324.54
7 554693 1.176 3792024.4657
-342875.5
370606 0.1760 0 574192.775
8 563048 426911 0.1519 1.151 -3987586 4377295.1526 585270.687

38
9
9 596032 1.139 -4567126 4973857.4778

486514 0.1396 6 596562.325


10 625882 1.128 -5178083 5581929.2910

549102 0.1286 6 608071.813


11 647210 1.117 -5814629 6201732.6449

613823 0.1179 9 619803.354


12 621762 1.101 -6449115 6833493.8765

675999 0.1013 3 631761.232

Table 10. Mean Relative error of Weakening Operator for 1- AGO data pattern

Time ^
ε (0) (1)
^
e (i) ∆´
1 42015.0000 0.0767
2 29799.8275 0.0540
3 10875.3766 0.0200
4 -6293.3252 0.0117
5 -22969.5441 0.0425
6 -19499.7750 0.0352
7 -22222.6869 0.0395 3.3380%
8 -530.3252 0.0009
9 17810.1868 0.0285
10 27406.6460 0.0423
11 -9999.2316 0.0161
12 -22969.5441 0.0425
In this table 10, here is the calculation for Weakening operator with First order data. Forecast

is done by first Order data and the average relative error is 3.3380%. The average relative

accuracy is 94.662%.

4.2.4 GRAPH & TABLE OF WEAKENING BUFFER OPERATOR FOR 2-AGO

39
Fig.06. 2-

Table 11. Calculation of Weakening Buffer operator for 2-AGO data pattern
σ (1) (i)

Tim n( 0) ~
n(1) ^
N (0 ) (1)
Ẇ (1) (1) ^
N (1 ) (1)
e c (1)

1 571011 445704 - - - 505835 505835


-
2 573117 732262.5 1075759.7432
101882 1.285 2.285 569924.74
3 575262 -1306452 1651978.5623
159408 0.564 1.564 576218.81
-
2234560.9669
4 578867
217295 0.363 1.363 188356.5 582582.40
0.268 -
5 584237 2823577.2347
2757187 9 1.2689 246508.5 589016.26
0.214 -
3419098.4193
6 591283
3348470 5 1.2145 305288.5 595521.18
0.179 -
4021196.3590
7 599771
3948241 1 1.1791 364835.5 602097.94
0.154
8 608786 4629943.6855
4557027 2 1.1542 -4252634 608747.32

40
0.136 -
5245413.8326
9 620221
5177248 1 1.1361 486717.5 615470.14
0.122
10 631618 -5493057 5867681.0451
5808866 0 1.1220 622267.21
0.109
11 634486 -6126109 6496820.3878
6443352 2 1.1092 629139.34
0.096
12 621762 -6754233 7132907.7542
7065114 5 1.0965 636087.36

Table 12. Mean Relative error of Weakening Operator for 2- AGO data pattern

Time ^
ε (0) (1)
^
e (i) ∆´
1 0.000000 0.00000
2 40740.5805 0.0684
3 38526.3677 0.0651
4 8255.2800 0.0147
5 -20615.6791 0.0388
6 -49012.5062 0.0977
7 -23725.1978 0.0451 1.6751%
8 -46738.7506 0.0931
9 -51797.1610 0.1045
10 7566.5743 0.0137
11 58187.4587 0.0964
12 38625.4956 0.0662

In this table 12, here is the calculation for Weakening operator with Second order data.

Forecast is done by second Order data and the average relative error is 1.6751%. The average

relative accuracy is 98.325%.

41
4.3 COMPARISON BETWEEN PREDICTIONS

Actual Forcast
580000
Fig.07.
560000
Comparison
540000
between 1-
Sales

520000
500000 AGO data
480000 pattern for
460000
0 2 4 6 8 10 12 14
Month

Strengthening Buffer Operator and actual data.

Actual Forcast
700000
600000
500000
400000
Sales

300000
200000
100000
0
0 2 4 6 8 10 12 14

Month

Fig.08 Comparison between 2-AGO data pattern for Weakening Operator & actual data.

Comparison between GM (1,1) prediction and use of buffer operator in GM (1,1) prediction

against actual sales data shown in figure 7 and figure 8 The comparisons show that prediction

accuracy of the second order weakening operator is far greater than that of the traditional GM

(1,1) model and that it is also superior to prediction accuracy of the first order strengthening,

weakening and second order strengthening operator. As such, the second order weakening

operator in GM (1,1) is a feasible prediction method for transportation disruption.

42
Chapter-5

RESULT AND DISCUSSIONS

The 1-AGO sequence ( y (0 )) has been achieved from original data sequence (~y(1)). Then quasi

smoothness (p (1)) and quasi index pattern (σ (1) (k )) has been checked with the required

parameter and satisfy the requirement. ‘Linest’ function of MS excel has been used. After

that the equation of GM (1,1) has been used to whitening the sequence and after reversing the

AGO sequence the predicted values has been found. A comparison figure for the actual sales

and the forecasted sales is shown below (Fig 09).

Actual Forcast
580000
560000
540000
Sales

520000
500000
480000
460000
0 2 4 6 8 10 12 14
Month

Fig 09. Comparison between actual sales and forecasted data by GM (1,1)

43
There is high demand for innovative data analytics to improve the strategy, operation and

performance of modern supply chains. Most companies that capture data-at-scale in their

supply lack the know how to use effective and sophisticated tools to analyze them.

Unfortunately, using more data in a decision-making tool does not always produce more

accurate results. Appropriate analysis of the right data indicators can improve the accuracy of

decision-making and the exactness of predictions. Supply chain resilience enables it to handle

disruptions and a variety of unpleasant operational events. Operational level measures

contribute to the potentially large set of data that are needed for aggregation with appropriate

analysis tools. In addition, aggregate data showing the indicators of supply chain performance

resilience performance of the firm represent the raw data for analysis.

Fig10.Comparison between 1-AGO data pattern for Strengthening Buffer Operator & actual

data.

From this figure the difference between actual data and first order data pattern for

strengthening buffer operator is shown. Here actual data is not stable but forecasted data is

stable than actual


Actual Forcast
8000000 data.
7000000
6000000
5000000
Sales

4000000
3000000
2000000
1000000
0
0 2 4 6 448 10 12 14

Month
Fig 11. Comparison between 2-AGO data pattern for Strengthening Buffer Operator & actual

data.

In Fig.11, the graphs for both actual and forecasted is shown in a Month vs Sales Graph. The

data is from 2-AGO and it’s done on Strengthening Buffer Operator. We can see that both

the curves are kind of straight line and increasing.

Actual Forcast
700000

600000

500000

400000
Sales

300000

200000

100000

0
0 2 4 6 8 10 12 14

Month

Fig.12

Comparison between 1-AGO data pattern for Weakening Buffer Operator and actual data.

From the figure, it’s seen that forecasted data is kind of parallel to the X-axis where the data

of month is inputted. The actual data is not as stable as forecasted data.

45
Actual Forcast
700000
600000
500000
400000
Sales

300000
200000
100000
0
0 2 4 6 8 10 12 14

Month

Fig.13 Comparison between 2-Ago data pattern for Weakening Buffer operator and actual

data

In this graph, the only anomaly is the first data of the forecasted curve. After that, both the

curves are following the same line and are almost parallel to the X-axis.

So, the result is quite impressive as the actual and forecasted data shows almost same pattern

with the error percentage of 1.675% in 2-AGO weakening buffer operator data. This result

shows significant amount of accuracy where the data is uncertain, random and less available.

One of the reasons for this is due to the fact that GM (1,1) uses the accumulated generation

operation (AGO), which is most important characteristics of grey theory. With second order

data pattern in Weakening Buffer Operator error percentage is lesser than GM (1,1), first

order Strengthening Buffer Operator, second order Strengthening Buffer Operator and first

order Weakening Buffer Operator.

46
Chapter-6

CONCLUSION

Demand forecasting is an integral part of the supply chain of any modern-day business. Time

series prediction refers to the process by which the future value of a system is forecasted

based on the present and past information. Generally, a predefined mathematical model is

used to make accurate predictions. Statistical and artificial intelligence-based approaches are

the two main techniques for time series prediction seen in the literature. However, these

techniques are not the accurate number of samples and are not too complex to be used in

predicting future values. On the others hand, Grey prediction model requires only a limited

amount of data to estimate the behavior of unknown systems. This paper has focused on Grey

prediction model in order to improve forecasting quality of demand with high uncertainty and

thus improving the supply chain uncertainties to a certain degree. After collecting data, we

develop the model and forecast the demand by GM (1,1) method. After implementing the

GM (1,1) model 10.9563% mean relative error was found. This outcome which is not ‘Good’.

And, the percentage of accuracy is 89.044%.

Constant effort to reduce the cost of the products is needed to sustain the market share, this is

achieved by slightly reducing high-quality components by substituting good-quality

alternatives that do not affect the performance of products. This strategy indicates the reason

for the slight dip in the quality indicators, resulting in a larger market share in the lower-cost

segments. For strengthening buffer operator, the mean relative error is 5.864% and accuracy

is 94.136%. For Strengthening buffer operator, the mean relative error is 12.8706% and mean

relative accuracy is 87.129%. On the other hand, for Weakening buffer operator 1-AGO and

47
2-AGO mean relative error is 3.3380% and 1.675% and mean relative accuracy is 96.662%

and 98.325%. So the weakening operator error for 1-AGO and 2-AGO is less than other

operator. Weakening buffer operator for 2-AGO has the minimum error and maximum

accuracy.

The results of the analysis are useful for their managerial level implications for

improvements and changes. The efficiency of the model can be tested by some other error

analysis and then the model can be implemented for any future prediction. By the use of

ANN and its various hybrid models, high level of accuracy can be obtained.

The purpose of the present study is to adopt Grey System Theory to predict the demand more

accurately and provide a reference for a company. Our study shows that Use of 2-AGO for

Weakening Buffer Operator in Grey Forecasting Model GM (1,1) is an effective method and

can be utilized to anticipate future demand. This finding may fill in as a source of perspective

to future studies and policy making.

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