(MPE)
DHAKA-1208, BANGLADESH
March, 2020
SIGNIFICANCE OF BUFFER OPERATOR IN
By
DHAKA-1208, BANGLADESH
March, 2020
i
CERTIFICATE OF APPROVAL
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.
Assistant Professor
Department of Mechanical and Production Engineering
Ahsanullah University of Science and Technology
Dhaka-1208, Bangladesh
Assistant Professor
Department of Mechanical and Production Engineering
Ahsanullah University of Science and Technology
Dhaka-1208, Bangladesh
ii
DECLARATION OF CANDIDATE
It is hereby declared that this thesis or any part of it has not been submitted elsewhere for the
15-02-07-065
Md. Sheikh Saad
iii
This work is dedicated to
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
vi
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
vii
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
viii
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
pattern
pattern
LIST OF FIGURES
.
Figure No. Figure Title Page No.
ix
Fig 3 1-AGO data pattern for Strengthening Buffer Operator 32
Fig 4 2-AGO data pattern for Strengthening Buffer Operator 34
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
xii
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,
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
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
13
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
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
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
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
14
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
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
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.
15
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)
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 grey prediction has been widely used in engineering sciences, social
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
1.1 OBJECTIVE
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
17
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
Effective supply chain management (SCM) has become a potentially valuable way of
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
18
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
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
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
19
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
analysis methods to forecast time series that are not smooth leads the scientists and
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).
20
The grey forecasting model has been successfully applied to finance, physical control,
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)
21
Chapter-3
METHODOLOGY
Grey prediction model is most adaptable approach to figure out future with a little
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
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,
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.
22
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
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
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.
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.
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
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
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
vibrating sequence. This operator is also called an average weakening buffer operator
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
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 )
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
k
( 0)
where, ~y(1)(k) = ∑ ~y (i); k = 1,2,3……, n………… (9)
i=1
25
3.2.6 STEP 4: OBTAIN MEAN GENERATOR SEQUENCE
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
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
c^ = ([BTB]-1BTY)………… (13)
After we get,
c^ = ¿ …………(14)
26
d −ck d
^y (1)(k+1) = ([ y (0 )- ( )]e +( )];k = 0,1,2,3 ……., n-1…………(15)
c c
Measuring the error then calculate the accuracy of the model. The errors are calculated as:
∆ = (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
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:
(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
found in Figure 1.
28
First order Second order
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
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
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
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)
5. The values are then put into the equation no. 10 which is also called the whitening
800000
700000
600000
500000
400000
Sales
300000
200000
100000
0
0 2 4 6 8 10 12 14
Month
Fig.02
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
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
The development of the use of Strengthening buffer operator in GM (1,1) for demand
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
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).
32
5. The error sequence was estimated using equation (17-21). The values of the estimated
6. The generated time response sequence of simulated values of the resilience indicator
1-AGO
700000
600000
500000
400000
Sales
300000
200000
100000
0
0 2 4 6 8 10 12 14
Month
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
s( 0) ~s(1 )
^
^
S(0) (1)
e
(1)
Ẇ (1) S(1 ) (1)
c (1)
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
The development of the use of Weakening buffer operator in GM (1,1) for demand
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
2. The first order Weakening operator was applied to equation (2-4) for the indicators to
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).
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
37
Fig.05 1-AGO Data Pattern for Weakening Buffer Operator
n( 0) ~
n(1) ^
^
N (0 ) (1)
(1)
Ẇ (1) N (1 ) (1)
e c (1)
38
9
9 596032 1.139 -4567126 4973857.4778
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%.
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)
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
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
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
42
Chapter-5
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
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
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
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
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
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
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’.
Constant effort to reduce the cost of the products is needed to sustain the market share, this is
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
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