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Demand Forecasting for Plumbing Products

The company Wilkins, which was acquired by Zurn Industries, is trying to develop an accurate forecasting technique to predict demand for its existing and new products. It needs to incorporate various factors like macroeconomic variables, price promotions, and new product forecasts. Two alternatives are considered: using regression modeling and discovering a new forecasting method. Regression modeling is not optimal due to insufficient data points. Time series forecasting is recommended since their products are seasonal and it can achieve a high R-squared value. For new products, collecting proxy data from similar product families and including external factors is suggested.

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OM PRAKASH MALLIK
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196 views10 pages

Demand Forecasting for Plumbing Products

The company Wilkins, which was acquired by Zurn Industries, is trying to develop an accurate forecasting technique to predict demand for its existing and new products. It needs to incorporate various factors like macroeconomic variables, price promotions, and new product forecasts. Two alternatives are considered: using regression modeling and discovering a new forecasting method. Regression modeling is not optimal due to insufficient data points. Time series forecasting is recommended since their products are seasonal and it can achieve a high R-squared value. For new products, collecting proxy data from similar product families and including external factors is suggested.

Uploaded by

OM PRAKASH MALLIK
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Wilkins, A Zurn Company:

Demand Forecasting
Group - 9
Sachin Ardao - P21178
Arav Gupta - P21205
Penchala Venkat - P21234
Subhankar Mukherjee - P21251
Vipul Tiwari - P21255
5'Cs Analysis
Company Context Customer
Zurn Industries Chris Conners(GM) had Barge wondered how to Plumbing Customer
targeted the Fire incorporate economic Market (50% of Sales)
acquired wilkins in
factors (unemployment
1971 Protection and Irrigation Customer
rate), bank prime loan rates,
In 1998 Zurn Industries municipal waterworks number of new housing Market (25% of sales)
merged with US customers as starts, marketing strategies, Fire protection and
opportunities for growth competitor products to Municipal waterworks
Industries Bath and forecast demand
plumbing products Barny Barge , the newly (potential for growth)
promoted Inventory
company
manager pondered upon
Products included 25
an appropriate
different product
families ( eg. PVB ,
forecasting strategy to
accurately predict sales
Collaborator
Fire Valve)
demand of both existing
and new products
US Industries Bath and
Plumbing products
Zurn Industries.
Problem statement
The company Wilkins is trying to come up with a forecasting technique that can precisely predict
the demand for its new products.

The company has many issues they need to incorporate into their forecasting method. These are:
Including macroeconomic variables

Impact of price promotions

Forecasting method for their new products

The reliability of their forecasting method


Alternatives Available
Using regression model for forecasting
Discover new forecasting method
Sales history of the products from 2001 to 2005 (1st Quarter)

Sales Data of PVB Sales Data of Fire Valve


EVALUATION OF ALTERNATIVES
Using regression model for forecasting
Pros Cons
Widely used forecasting May not give the proper
method forecast due to certain data
related insufficiency

As R square and Adjusted R


square value is very low thus,
this forecasting method is not
optimal to use in this case.
EVALUATION OF ALTERNATIVES
Discover new forecasting method:
Pros Cons
It helps to understand the past behavior and The conclusion drawn from the analysis of time series
would be helpful for future predictions is not always perfect
The statistical technique has been developed so The various factor that affected the fluctuations of a
that the time series can be analyzed in such a series cannot be fully adjusted by the time series
way that the factor that influences the fluctuation analysis
of the series may be identified The various factor that influences the time series may
It helps to compare the performance of two not remain the same for an extended period of time
different series of a different type for the same and so forecasting made on this basis may become
time duration unreliable
The analysis of time series helps us to compare Sometimes the increasing trend in the time series data
the present performance of the series with that of may be due to the increase in population. So, unless a
the past necessary modification is made to the data it would be
difficult to understand the trend
RECOMMENDATIONS
Since PVBs were used predominantly by the irrigation market segment, their sales are
expected to be independent of the unemployment rate, bank prime loan rate, and new
construction, as suggested by the regression statistics
The regression model for forecasting is very sensitive to the number of data points, which in
our case are less. Thus the efficiency of this model takes a deep hit and cannot be used
As the products they sell are seasonal, the time series forecasting can be used to get fairly
accurate forecasting.
For the R square value, we could see the coefficient is high( ~95%), which shows it can be
a near-perfect fit
For the new products, we would suggest collecting the data from the families as a proxy
and try to include the external factors
Thank You

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