Investigation of challenges of the accurate forecasting of demand of adult diapers in Sri Lanka : case study of a leading pharmaceutical company

Abstract

In this competitive market environment proper product forecasting is a key element for the significant growth of the company. This case study focuses on factors effecting Adult Diaper sales in a reputed pharmaceutical company in Sri Lanka. To face high competition among competitors, organization need to come up with a strategy which can mitigate the above situation. The aim of this study was to explore existing demand factors effecting the diapers segment of the organization, in order to suggest feasible attributes that can be integrated into the enhancement of adult diapers forecast technique in the organization. In a research the theoretical framework plays a greater role so as to conduct the research. In this study, it is straight forward to determine the factors affecting the accurate forecasting of demand of adult diapers. According to the study, dependent variable is demand of adult diapers whereas independent variables are factors affecting the accurate forecasting of demand of adult diapers. To gather factors effecting adult diaper sales forecast, had to go through with a thorough literature survey. To further verify the factors found from the literature survey, pilot survey was conducted in open forum which participants for the survey representing different industries. With high rate of score for each factor, same pilot survey factors were taken into the primary survey. The primary survey was done within the organization (internally conducted survey) and gathering information with in the sample population is more accurate. According to findings, seven factors identified as critical factors having an impact on the diapers forecast. Those factors are poor prediction reliability, unawareness of importance of forecasting, no one is accountable for demand forecast, poor communication among relevant parties when forecasting, planning done around the goals which do not become reality, sales figures did not reflecting the actual demand pattern, product planning issues. Factors were validated through the literature survey. Applicability to local context is validated from the pilot survey. While using EViews 7, Six years sales data were evaluated. Based on observation all four segments of the adult diapers consist of ARIMA (0,1,1) data models. Further evaluation of the ARIMA model used and based on that for each unit forecasting model was developed. This will provide better solution to the stock out and over stock situation of the organization.