Professional Documents
Culture Documents
10 1 1 634 7080 PDF
10 1 1 634 7080 PDF
Brunel University
Doctor of Philosophy
by
Walter Ramsey Crowe
Brunel University
1977
ABSTRACT
critically.
ACKNOWLEDGEMENTS
Britain.
Fellowship Award;
experience:
of Ottawa.
Edinburgh.
Mass.
Oakland, California.
London.
Security, London.
London.
City.
iv
Reading, Berks.
Chicago, Illinois.
Nottingham.
Washington, D.C.
Colchester, Essex.
Ontario.
Warwick.
London.
Board, Birmingham.
Longbridge, Birmingham.
Ottawa, Onto
Toronto, Ontario.
City, Herts.
Ontario.
Wycombe, Bucks.
College, London.
Saskatoon, Sask.
Ontario.
London.
Birmingham.
Toronto, Ontario.
Research, London.
Bristol, Bristol.
TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS ii
LIST OF TABLES • • x
Chapter
1. HOSPITAL SUPPLIES MANAGEMENT:
INTRODUCTION . 1
Chapter Page
6. SIMPLE FORECASTING METHODS • 125
The Data Base 125
SIMPAVE 126
LASTAVE 126
LINFOR • • 127
MOVAVE and MOVETREND 127
Evaluation of Forecasting Errors . 128
Measures of Performance 130
Rating the Simple Methods 131
Summary 136
REFERENCES • 234
APPENDIXES
LIST OF TABLES
Table Page
1. Health Care Expenditure in Canada. 12
Table Page
21. Accounting ratios of Canadian hospitals
and corporations • 53
Table Page
44. Tersine seasonal forecast: seasonal
item • 182
LIST OF FIGURES
Figure Page
I. Major hospital centres in Southern
Ontario • 8
Figure Page
XXII. Box-Jenkins Autoregression Patterns . 142
Figure Page
XLV. RESTRAIN control chart: double
exponential smoothing • 220
INTRODUCTION
cures.
attained.
THE ENVIRONMENT
systems required.
-6-
One doctor per 0.3, 420 and 4377 square miles respectively.
road or rail.
is complex.
IN CANADA 1977
L a k e
t>
N
~
I
CD
KingstonI~n I
1100 tTj
k eOn t a r i 0
- - --- ......
- - --)( CN Rly
hwy
Lake Superior
U. S. A.
FIGURE III
ThUNDER BAY DISTRICT
Hospital Centres
with populations
-11-
facilities.
Consolidated Fund:
2000.
Table 1
1969 5,100
1972-73 1,982 (+10% over 1971-2)
1973-74 2,257 (+13.9%)
1974 8,000
1974-75 2,703 (+19.8%)
1975 9,000
(est.) 1975-76 3,189 (+18.0%)
taken: Ontario.
HOSPITAL ORGANIZATION
hospitals.
on a per-diem rate:
Table 3
CANADIAN HOSPITALS
1974
GENERAL AND
ALLIED SPECIAL
Hasp: 1,241
Beds: 157,234
-'J,
PUBLIC PRIVATE FEDERAL
-+ 860 ~ 11 ~ 26
123,251 370 4692
CHRONIC/
EXTEND. CARE
'-+ 110
15,985
-16-
Table 4
1974
PUBLIC GENERAL
Hosp: 1,043
Beds: 147,167
I
Non-Teaching Teaching Other
H: 784 75. 2 ~ H: 76 7.3\ H: 183 17. 5 ~
B: 75,301 51. 2 ~ B: 47,950 32.6' B : 23,916 16. 3 ~
Long No Long
Term Term
Units Units
156 628
30,093 45,208
1-99 Beds
57 484 1-499 Beds
3,680 54,635 30
100-199 Beds 10,856
41 80
5,628 10,437 500+ Beds
200+ Beds 46
58 64
20,785 19,092 37,094
-17-
percent to outpatients.
teaching hospital.
successive days. The mean rate was $96 for all public
figures.
hospitals were:
$000 Percentage
Ministry of Health 1,410,007 96.3
Federal Government 1,442 0.1
Workmen's Compensation Bd. 18,406 1.3
Non-residents of Ontario 30,008 2.0
Other 808 0.3
table 5.
Table 5
Drugs,
Total Gross Medical, Housekeep. Physical
Days of Operating Surgical Laundry Plant
Location Care Costs Wages Supplies Admin. Food Linen
'000 $ $ $ $ $ $ $
Toronto
Sick
Children's 212 268.03 154.53 16.09 28.04 3.70 4.84 9.79
Thunder Bay
McKellar 115 112.71 80.03 6.72 8.30 2.58 1.08 3.42
Sault Ste.
Marie General 90 104.39 75.53 6.61 7.95 3.17 0.81 2.40
Table 6
CURRENT EXPENDITURE OF
PERCENTAGES
Salaries and
Benefits 65.1* 76.7 76.9 78.0
Medical and
surgical Supplies 3.1 3.1 3.1 3.1
Pharmaceuticals 3.8 3.0 2.6 2.4
Food 4.9 3. 5 2.0 2. 7
Linen 0.5 0.3 0.3 O. 2
Fuel, Electricity
and Water 2.1 1.6 1.4 1.5
these institutions.
Table 7
1975
Gross
Active Operating
Bed Average Costs
Staff Rating Admissions Stay $000
Table 8
DISTRIBUTION OF EXPENSES
Salaries
and Wages 288 35 5,794 67 14,497 78
Materials
and Supplies 520 62 669 8 2,130 11
Depreciation 16 2 411 5 575 3
Taxes* 8 1
Interest Charges 504 6 47
Other
Administration 1,253 14 1,423 8
AT END 1970
ASSETS LIABILITIES
Current Assets % of Current Liabilities % of
Accounts Receivable: Total Trade & Accounts Payable 10.7 Total
Blue Cross, Workmen's C.B. 1.6 Assets Bank Loans, Overdrafts 4.2 Liabilities
Provincial Plan 2.8 Accounts Payable 3.9
Year end Adjustments 0.4 4.8 Accrued Liabilities 3.5 27.9
Inventory of Supplies 1.8
($414 per rated bed)
Cash on hand & in Bank 1.2
Investments 1.2 10.2
IV
Capital, Short Term Liabilities IV
Capital Assets I
Investments 2.8 Bank Loans 3.5
Capital Grants 2.0 Accounts Payable 3.4 9.9
Cash on hand & in bank 0.7 6.2
INTERNATIONAL COMPARISONS
marginally.
were:
Federal Government 25
$140 billion in less than ten years, yet many are not
table 10.
Table 10
1974 REORGANIZATION
DHSS
Secretary
KEY of State
Corporate DHSS
Accountability
Officers
I
'fI Regional
Individual
Health Regional
Officer - -- - •
Accountability Authorities Officers
and Joint Team
Responsibility RHA
~
Area
*
Full time paid Health Area
staff
Authorities
-- --
Officers
AHA
J,
District Management
Teams
I
..,
I
Finance
Officer*
-26-
medical schools.
needs.
health.
rapidly.
Canadian expenditure.
Table 11
EXPENDITURE
£:. million
Table 12
Table 13
Table 14
ALL HOSPITALS
1963 1973
Hosp: 2953 HOSp: 2724
Beds: 5334 Beds: 5056
1963 1974 1963 1974 1963 1974 1963 1974 1963 1974
higher.
Table 15
ENGLAND 1974-75
( i:. 000)
Gross
Item Costs %
3,298,457
INTRODUCTION
sterilization of supplies.
forced together.
carefully".
and packs.
Table 16
Table 17
MAJOR DEPARTMENTS
COOPERATIVE PURCHASING
its own purchasing, but now there is the quite rapid spread
-36-
ever, many hospitals are not covered, and those that are
,
may select or reject agreements at will. Letouze and
ing and stores, but the indirect costs of the time of all
stores.
FINANCIAL ASPECTS
Table 18
I:. Million
\
imi1. Total Supplies
proposal:
activities.
inefficient purchasing.
1945 were disorganized and the 1948 N.H.S. had the effect
centralized stores.
, to
1972 1973 1974 1972
MANAGEMENT OF INVENTORIES
implementation by hospitals~
their optimism.
manufacturing process.
ACKLANDS
180 147 82 92 63 46 42
Winnipeg
CANADIAN GENERAL
ELECTRIC 571 407 71 198 49 168 25
Toronto
CANADIAN TIRE
427 244 57 100 41 112 51
Toronto I
~
\0
EMCO 27 I
99 77 78 51 66 48
London, Ontario
HONEYWELL
2204 1046 47 364 35 535 38
Minneapolis
METROPOLITAN
STORES 68 34 50 30 90 9 34
Winnipeg
REYNOLDS
ALUMINUM 56 35 62 26 73 15 26
Quebec·
WABASSO
65 45 69 33 74 15 18
Montreal
is the value:
Pharmaceuticals 1.0
Foodstuffs 0.5
Housekeeping 0.5
industry.
required.
have low values, they are close to the 1:1 proportion often
Table 21
ACCOUNTING RATIOS OF
Cash/Total
1. 3% 1. 9% 0.2% 6.2% 3.4% 5.3% 2.4%
Assets
Inventory/
l . 7% 1. 5% 1.6% 1.2% 4.0% 49.0% 26.0%
Total Assets
R. O. P. = L i5 + KdO.fL (1)
where D
- is the average of recent demands.
E. O. Q. = Q* =)2 I DP A ( 2)
quantity discounts.
from the time need for the item is recognized by the user
but are not of such low annual usage value as (e). These
izing total order and carrying costs, when lot size order-
ing and unit carrying costs are relatively low and average
wagner-Whitin Method.
necessary.
applications.
system.
Table 22
MAIN CHARACTERISTICS
OF HOSPITAL RESPONDENTS
1972 1975
MEASURE STATISTICS SURVEY SURVEY
The two surveys showed that the main use for com-
for these. The mean order cost was said to be $11 in 1972
Table 23
Crowe Crowe
ORDER QUANTITY 1972 1975 APICS
% %
Estimate by Purchasing Manager 38 28 39
Estimate by using department 2 20.5
Slide Rule or Nomograph 15 20.5
Computer Programme 18 15 49
Release under contract 5 10 18
Dataphone 4 2. 5
Several Methods 16 2. 5 Yes
None Reported 2 0
100% 99%
REORDER POINT
94 100 100
499 beds) did so. certain items are more commonly pur-
Table 24
WITHIN A HOSPITAL
By Size By T:iEe
Small 100 Beds Acute Care Other
outpatient facilities.
ment beyond that claimed above; but it would seem that the
emerge:
-72-
facturing.
within bounds.
Table 25
20 MAY 1976
Food $ 78,667
Pharmaceuticals 28,033
Medical Gases 1,363
I.V.'s and Sets 49,788
AK Supplies 15,002
sutures 28,464
Medical and Surgical 165,880
Printed Forms 78,256
Office Supplies 12,106
Laboratory Supplies 32,832
X-Ray Supplies 29,048
surgical Instruments and Appliances 7,730
Dietary Supplies 36,369
Housekeeping Supplies 38,232
Linen Disposables 7,295
$609,065
the hospital.
patient care and safety, and Ammer (1975:4) noted that the
available.
-77-
use of supplies.
written:
follow.
Kourie (1976) analysed a pilot study of general
Revans (1964) for the view that the hospital tends to act
,
as a 'single organism' tending to perform wholly effici-
ently, or not.
used.
inventory model.
true priorities.
future.
analysis;
statistical analysis.
results.
requisition information.
pertinent information.
magnetic tape.
items.
discount to accept.
DAILY
tiOUTINE
Sort by
date, item
8
number
Files up-
date )
daily
Daily
Order Leve
check
!
~;llWOu-_ _~) lNex t ~ tem)
"on f1le _
FIGURE IV
BhUFICH
DAILY PROCE.DURBB
-87-
MONTHLY
ORECA~TS
Accumulate FIGURE V
daily i tern BRUFICH
demands
MONTHLY ROUTINE~
no
em. Patt
and first
forecast
___ ~.I
F :
Forecast
Initialise
Routines
parameters.
("lUARTERLY
R.O.P.
no ,~
~
New
MADLT
Construct
temporary
1
New Service
h.D.I).
:B'unct ion,
Safety Fac1 .
S/Stock
1
New ROP =
DDLT +
sis
FIGURE VI
BRUFICH l'.1anagement
QUARTERLY ROUTINES Report
Next iten
on file
-90-
Special AB
ecision b
\~anagement
@
urrent or )
1
ltered ABC Usage to
limits date; cost
current AB
status
ompute ne
value:
Usage x
l'rice
Item
~ class if ied 1+-_~U",·lOL...
'-""~ AnEll,Ys is
A"''' by value
Report
Item
yes
class ified I"~~----
B
Item
.---------------------classified
•
C
PIGURE VI I
B1WFICH
ANALYSI~ bY VALUE
1:) R OC ED Ulill
-91-
Management yes
decision
EO~,
--
ROP
compute
_y_e_s____~) adjust. an
demand
=
Month }'ore
x 12
test
Bas ic EOQ
Calculated
no
'"'--------0
Hound EO~
Subroutin to nearest
Discount pack size
Iteratio
Choose bes
EOo/DISC
combinatio
Round best
EOI.,I to
FIGURE
EO!..!
VIII (2)
}hOCE.DURE
(continued)
8!
ext item
on file
-93-
Table 26
Percentage of
Annual Number of Percentage Cost of Total Cost
Issue Value Items of Total Issues of Issues
B Items:
$100 - 2,000 880 53% $ 540,975 45.5%
C Items:
$0 - 100 654 40% $ 40,000 3.5%
FIGURE IX
BRUFICH
SRII~~ sur\J',':ARn~3
8
_ _ _ _ _ _"" Changes in ANNUAL
). ABC, Value ~
LEADrr etc
~ ________-4) Latest
EOQ
Summaries:
G Orders
» Stockouts
::iafety st.
. STOCK
7 STATUS
~rrors
REfORT
G -
Trip Freq. .......
)
Constants
~
8 H1
___________ Probabilit
~ tests, tre~'
seasonals
8
Discounts
DI~CO ~ ________~
) offered by ~
Vendor
-95-
with evaluations.
requirements.
and cheap.
ment.
-97-
routinely:
safety stock.
squares has been mainly used for items with N above 35,
Poisson.
tion.
results, O'Toole (1964) and others state that the test can
.81 theoretical
•7
.63
•5
/ not significant
difference /
·4
•3
Figure X
.2 J Kolmogorov-Smirnov Test
Normal Distribution
.1 item 11
.09
.99
.54 / significant
at 0.10 /
Figure XI
Kolmogorov-Smirnov Test
Exponential Distribution
item 11
.09
-101-
( 1) Grouped Distribution
Theoretical Smirnov
Range Frequency probe cum p. Poisson Statistic
60
with n = 45.
using:
hypothesis is accepted.
Critical
Value .90 .80 .70 .40 .30 .20 .15 .10 .05 .01
Z .046 .062 .079 .147 .184 .241 .284 .347 .461 .743
-104-
Table 27
GOODNESS OF FIT
NORMAL DISTRIBU'IION
function.
intuition."
ascending order.
Table 28
Item
Sequence Number Description N.
5 82100010 Paper E. E. G. 62
6 88100010 Face Tissue 62
7 07100010 Apple Juice 62
11 25213050 Ether Anaesthetic 45
15 34100020 Elastic Bandage 29
16 09110020 Baking Powder 32
17 08120020 Jelly Powder 32
23 43100020 Culture Bottle 34
43 59100040 Gypsona Bandage 60
44 83100010 Ball Pen 62
45 82210010 Copier Paper 62
60 16100010 Cotton Sheeting 62
65 26210050 Fusidate 17
1. Continuous Uniform
- ~
10I
5 -
r--
-
~
~
5
~ ..... I-- ,......
ro- ro- I
~ I- - ~
I-'
o
-...J
n
o- ~ .... n.. n
...~- . 1000
,
I~
_1
12DO
_1
.: roo
I
item 5 item 6
15
EEG Paper Face Tissue
10
Figure XII
5 Goodness of Fit histograms
a50
5
5
item 11 item 15
I-'
o
Ether Anaesthetic Elastic Bandages CD
J
10
10
~
5
--- 5
~
I---
~ I---
~
•
item 16
10 lifo . -
~ It 1I l~
item 17
Baking Powder
Jelly Powder
1
15 Figure XlV
Goodness o£ Fit Histograms
1
10
I
5 r-o
o
5 to
I
15
lIMO lOCO
)0 ~o ~ lID
item 44
item 23 Ball Pen
Culture Bottle 10
item 45
Copier Paper
" It
" ZIt
~
15
r---
item 43
Gypsona Banda ge
10 ~
Figure XV I
....
Goodness of Fit histograms I-'
o
I
5
r---"'1
~
40
<Ii 1'-
"I
~
10 ~ 10
item 65 item 60
Fusidate Cotton Sheeting
~ 5
5
10
•
2.C Jo
I
~ ~ 360
-111-
2. Poisson
3. Negative Exponential
Exponential distribution.
4. Normal
til
~
• .....
• s::
• ::s
I-l
0
I-l
I-l
Q)
•
•
•
Lf)
•
II-l
0 s:: ••
0 •
.....
'0
H
0
0
~
::s •
.c: .....
:> ..... .0
x
Q)
....
Q) ~
I-l
I-l ~
::s ..... .....
til
•
.....01 ...:I 0 •
r... 01 .... •
.....s:: SIII •
~ I-l
til
Z
0 •
8
Q)
•
0
•
•
•
•
•
••
•
•
•
•
• •
Lf)
I
.0
I-l
III 0'1 Lfl 0 0 0 0 0 Lfl
dP
0'1 0'1 0'1 en Lfl N ....
-114-
Table 29
Cum. Cum.
Error Frequency Freq. Prob.% Error Frequency Freq. Prob.%
~
Kolmogorov-Smirnov and Cramer-Von Mises are: "typi-
5. Lognormal
Figure XVII
Lognormal Scale Test
% cum.
normal scale
99
• •
98 item 45 item 7 item 6
Lognormal Lognormal
95
90
80
50
20
10
2 4 demand, converted
Table 30
Item Critical
Number N D.F. Exponential Normal Poisson Uniform Lognormal Value .05 Accept
5 62 4 Large 61 53 9.5
6 51 59 12.6
6 62 4 28.4 9.5
5 85 10.4 11.1 Lognormal
6 14.6 19.3 12.6
7 62 4 94 13 9.5
5 108 13.5 15 11.1
11 45 2 74 6.0
5 21.5 19.3 11.0
........
~
6 26 12.6 I
15 29 4 11. 6 9.5
17 32 3 1.6 7. 8 Poisson
23 34 2 38 6.0
43 60 3 16 7.8
4 28 162 9.5
6 37 24 18 12.6
44 62 4 76 58 9.5
Lognormal
5 8.9 4.8 11.1
45 62 4 38 9.5
6 52 12.7 5.1 12.6 Lognormal
7 24.8 14.1
60 62 4 57 150 9.5
5 60 78 11.1
t
Table 31
Item Critical
Number N D.F. Exponential Normal Poisson Uniform Lognormal Value .05 Accept
Item Critical
Number N . .
D -1<' Exponential Normal Poisson Uniform Lognormal Value .05 Accept
Item
Number N D.F. Exponential Normal Poisson Uniform Lognormal Accept
6 62 62 24 24
17 32 8 0.371
15 1.7 2.4 2.4 4.5 Poisson
32 1.9 6.4 6.0 6.3
43 60 60 7.7 12 17
65 17 15 .204 .2133 1. 89 1. 37
? Exponential
17 5.7 2. 5 2.745 5.7 3.46
-- ---
-121-
could be made.
SUMMARY
Item 6
Simpave Signed 292 .08 2.83 .0484 4.52 All Yes
M.A.D. 271 .63 1.90 .2025 42.82 No
Lastave Signed 437 -.47 3.26 .0632 5.98 All Yes
M.A.D. 46 .0846 6.13 Possibly
I
Movave Signed -7 -.07 3.06 .0391 Yes .....
Movetrend Signed 20 .23 3.34 . 0784 4.65 Yes N
N
Linfor Signed 15 -.64 3.90 .0508 4.31 Unlikely I
Simple Exp. Sm. • Signed 117 .35 3.93 .0522 5.11 All Yes
Trend EXp. Sm. Signed 12 1. 00 6.87 .1018 No
Double Smoothing Signed 54 .30 3.44 .0683 Yes
Seasonal Signed 64 .30 2.58 .0686 Yes
Item 2129
Simpave Signed 16 2.10 28.7 .2626 Possibly
M.A.D. 22 -.17 3.1 .1172 Possibly
Lastave Signed 0 . 33 3.0 .079 4.97 Yes
M.A.D. 26 .150 18.27 Possibly
Movave Signed 1 .0871 5.37 Unlikely
Linfor Signed -3 .1364 22.9 Possibly
item 6
10 MOVAVE errors
5 .
I
I 1 I
-1110 ISO
IS
10
ite m 6
SIMPAVE signed
errors : Expon.
15
item 2129
SIMPAVE M.A.D.
10 Normal dist.
5 Figure XVIII
Histograms of
forecasting errors
I
,... '40 '8
-124-
appendix.
SIMPAVE
LASTAVE
month's forecast:
-127-
X
t
= X _
t l
autocorrelated.
LINFOR
cant.
priate for linear trends but will not give accurate results
tion.
-129-
N
SSE = I et
t=l
N
ACSE = ~ et/N
t=l
~llet'
MAD = N
t=l
L
RMSE =
N
SSE x 100
PBE = MAD x 0.5 percent.
least oscillation.
at +
- 3 S.D. from the arithmetic mean.
run of data.
MEASURES OF PERFORMANCE
x- or -
X
DFI = a' 1.25' (MAD)
e
3. Accuracy Percentage
forecasting.
Table 34
PBE:
Forecasting Best Value First & Second
Method Overall Places Theil lUi
Notes
detail.
Table 35
Root
Fore- Mean Mean
casting square Absolute Percentage Theil D'Amico
Method Error Deviation Bal. Errors Coefficient Index
MOVAVE 303 265 18 0.10 n.a.
MOVETREND 284 230 18 n.a. n.a.
LASTAVE 436 353 8 0.12 4.0
SIMPAVE 705 665 138 0.20 2.4
LINFOR 414 325 13 0.09 15.0
are substantial.
in table 36.
Table 36
Root
Fore- Mean Mean
casting Square Absolute Percentage Theil D'Amico
Method Error Deviation Bal. Errors Coefficient Index
MOVAVE 31.1 28.1 13.4 0.24 n.a.
MOVETREND 29.5 23.1 4.9 n.a. n.a.
LASTAVE 44.4 35.3 0.5 0.30 1.5
SIMPAVE 38.7 34.2 74.0 0.27 1.8
LINFOR 29.5 22.6 4.0 0.19 7.6
-134-
Figure XIX
MOVETRl~ND
2400
actual
••
•
10 20 30 40 50
800
MOVETREND
Signed Errors
400
400
-135-
Figure XX
LINFOR and LASTAVE
Forecasting Errors
Face Tissues
500
LINFOR
500
10 20 30 40 50
90
900 LASTAVE
-136-
Table 37
COMPLETE SAMPLE
MOVAVE 1 27
MOVETREND 1 31
LASTAVE 1 55 Method itself
restrains swings
SIMPAVE 23 6
LINFOR 22 5 Final 12 months are
seasonally adjusted.
MOVAVE
10 20 30 40 50
10
LASTAVE
50
Figure XXI
Forecasting Errors
Seasonal Item
-138-
recent past.
factory for data with other than stable and well understood
INTRODUCTION
IDENTIFICATION
observation."
average (ARMA).
figure XXII.
ESTIMATION
Figure XXII
BOX-JENKINS
Autoregression Patterns
1
0
0
PI(,
0
0
0
0
0
5 K
First order with
Exponential decay
-1
1
•
0
•
0
0
0
•
0 First order with
0
decays in oscillation
0
-1
Q
0
•
0
0
•
0
0
Theoretical
Autocorrelation
Function
adapted from :
Thompson & Tiao (1971)
-143
Figure XXIII
BOX-JENKINS
Moving Average Patterns
~ 0.5
o 5
A First Order
Spike at the first lag
MA{l) Process
-0.5
principle of parsimony.
DIAGNOSIS
Appendix.
FORECASTING
Face Tissues:
Table 38
Years
1 2 3 4 5 6
976.36 + 25.3 X
2000
I
I-'
,J::.
-..J
I
1000
Figure XXIV
Demand Pattern and
Regression Line
Face Tissues
10 20 30 40 50 6 7-0 periods
-148-
per run for one single set of data and involves 2000
~
p
(B) and e q (B) to be included are decided with reference
to the shape of the curves produced as output, and know-
stage.
differenced data.
o I _01
5 •
01
/'/
•
KEY /
•
I
......
U1
10 o autocorrelation
coeff. of undifferenged
series.
/
•
o
values of first
differences.
/
•
2. second difference:
one plotted. •
/ Figure XXV
15
•
/ Autocorrelation Coefficients
Face Tissues
o
20
-151-
stationarity.
of it.
stationary series.
Q
- - -- -- o
correlations
--
second 0
--
=- - - -
differences
5
o c-_ -------
first differences
o - I
I-'
10
---
- ..... --- U1
N
I
-
- --
15
() -
0_
- Figure XXVI
Effect of
Seasonal Differencing:
o
Face Tissues
20
" o
One seasonal differencing:
interval 12.
-153-
utilized.
functions of the
,.a~'s could lead to appropriate modifica-
t23 = -0.23).
meters;
3000
Figure XXVII
TYMPAC First Run
Face Tissues
\
\
\
.,
.............. .,0"· mean forecast
,~
\
I I I
....
"
I \
I \ I I U1
2000 I
I
,- ~
I
I
,
I
o
. •• ..
..
I
\N,Jll
,;I Lower
.. .
' ...
" ....
con~~ence limit
1000
I
I
I
I
I
I Figure XXVIII
I TYMPAC Firkt Run
I Residual Autocbrrelations
I
I Face Tis~ues I-'
U1
U1
I I
I
I
I
I
I
I
I
I
I
I
951 CI ________ LAGS
-156-
d = 1, P = 0, and q = 2
run one) is less than 0.04. Run two (AR = 0.5 MA = 0.614)
Ul
X Z ~
H H 0 ::l
X I( H ~
X 0 E-t
0 I( '0
W-H--...:! -,::
~ Ul ~ 0
::l ~ ~ U
IJI ~ ~ Q)
•.-1 0 Ul
I".z.I U
N 0
E-t
0
ICC
Ul
H
U
---------,-- ----
95% CI -.2 •2 I 95% CI
I
I
I
I
.....
U1
OJ
I
I
I
I
I
I
I
I Figure x~x
I
I RESIDUAl
I AUTOCORRELATtONS
I
I
Fourth Rhn
I
-159-
organization.
Table 40
ITEM 88100010: FACE TISSUES
COMPARISON OF ACTUAL, FORECAST AND ERROR
2300
-•
• ••
• I
.
., \. ...... t"
I \
\
\ .I
/
/
I.actual outcome
1
.~ /\
• \..I .\
• I \/
• \1 .
•
-.• •
•
I
I-'
•• 0\
• • I-'
• I
•
•
• •
•
•
130 •
• Figure XXXI
•
• TYMPAC
a
• Twelve month ahead
forecast
•
300 •
4 50 60
-162-
SEASONAL DATA
pattern.
output.
I
....
0\
W
I
Figure XXXII
Demand pattern and
Regression Line
Seasonal Item.
10 20 30 40 50
j
60
I
70
•
-164-
Figure XXXIII
Autocorrelation Coefficients
Seasonal Item
-0.4 o 0.4
correlations
second 0
,1-==t=====Pf==---
differences I
I
I ---,------~----1------=~O~~
I
I
I
I ___---+--I---------r--Ifirst differences
~~I_-
I
:__li~=====rf======F==========~
I J-t---+---1r------ I 0"
95% ~I J
9 S CI
-165-
Figure XXXIV
Autocorrelation
No Seasonal Differencing
30 Lags
Seasonal Item
• .~ - - __ - c,rrelation
differences
---
_~~--t---.~
•
-166-
Figure XXXV
Two Seasonal Differencing
Lags o~ 12 and 6
Seasonal Item
-0.6 o 0.6
.,/ - . . . ocorrelatjion
second 4ifference
........
...
-- - -
J -- .=.-------
.~ t - - - - --.
I
--It
-167-
Table 41
SEASONAL DATA
EXPERIMENT SPECIFICATIONS
RUNS
1 2 3
Regular Differences: d 1 1 1
Length of season: S 12 0 12
Seasonal Differences: D 1 0 2
Regular Autoregressive terms: p 1 1 1
Seasonal Autoregressive terms: P 0 0 0
Regular MA terms: q 1 1 2
XXXIX.
Table 42
Number of
Initial Values Iterations Closing Values
p q P p q P
I
I
I I
t-'
I 0\
00
I
I
I
I
I
I Figure XXXVI
Residual Autocorrelation l
I TYMPAC Selected Run Result
I
I
I
95%1 CI 95%\ CI
- - - - - _ .. _--- ------- -- ~------
t
-.4
I a I .4
I I
I I
I I
I I
I I I
I-'
I 0'\
\.0
I
I
I
Figure XXXVII I
Autocorrelation I
of 24 Residuals
First Run
I
95,1 CI T I
951' CI
-0.4
,
0.5
I ~
I
-....J
..I
o
I
I Figure XXXVIII
Autocorrelation
I
of 24 Residuals
I
Second Run
I
I
I
95,1 CI
0 0.4
I I
I I
I I
I
I I
I
I
I
~
I ~
I
-...J
I ~
I
I
I
I
I
I Figure XXXIX
I Autocorrelation
I of 24 Residuals
Third Run
1
95% CI 95%1 CI
-172-
Table 43
( 1) (1 ) (2) ( 2) ( 3) (3)
Actual Fore- Fore- Fore-
Periods Demand cast Error cast Error cast Error
say."
inventory managers;
INTRODUCTION
tal management.
(1 - e(,), beta
e forecasting error
t
T Smoothed trend
cast:
2
Alpha • Beta = (1 - I)( ) , and N represents
N + I '
time" L is then:
F t +L = F t + 1 x I, ••• (2)
1 - 0(
0{.
.S
correct for the lag, yet requires only the one parameter
(X) + (S [1]
t
(X) - S[2]
t
(X»
s [2 ] (X)
2S [1]
t
(X) - t • •• ( 4 )
1 -cf.
01..
. {s~ll (X)
_ S [2]
t
(X) } • •• (5)
S [2] oJ.
St+T
2 S [1]
t
(X) - t
(X) +
1 -a(,.
•
SEASONAL VARIATION
programme.
ence.
R
m = Dm/B m ••• (7)
experiment.
A • •• (8)
m
ART
m
= A - A
m m-l
SART
m
= QG.(ART ) + [(1 -
m
~) (SART _ )]
m l
1 - ol.
ERAT A + [ ~ x SART )
m m m
XPDM = ERAT x B
m m m
is now compiled:
• •• (9)
using:
R trend
t
It seasonal index
X actual demand
t
Xt
. .• (12)
I -
t+m - { Xt +
C· - (1 - C) •
and C = 0.30.
Table 44
Table 45
Year 4: -39.8
Years 5, 6: +652.7
~
I
,
'\ " I \ I-'
15<1
:.ctual
, I
I I, I
I \
II I
I
\
\
\
"
I \ I
,v
CD
"'I"'
.~\'
I
10
/" ~howtes t .
.'
/ \' / /\1 ,'\ ..
'0(:0.35
\ \ ,\
, /
5 ., \.
/~ -
Year 3 Year 4 Year 5 Year 6
-185-
than simulation.
a = + (1 - at: ) • •• (13)
t
• •• ( 14)
x
F
t
= 0' (...J:.) + (1 - 0') F t _ N' · .. (15)
at
· •. ( 16 )
observed."
= a
t
+ b T + C T2
t "t
where
at =
3S [l] (X) - 3S[2] (X) + s [3] (X)
t t t
0(.
[ (6 - 5ot)
S [l] (X) -
b =
2 (l 2 t
t - 0( )
S [2] S [3 ]
- 2 (5 - 4~)
t
(X) + (4 - 3tM!.)
t
(X) ]
elapse.
situation.
= ~ '(0.659 + 0.341L)
in chapter nine.
same time new high and low series surrounding the normal
values.
= 0.05
0.35
2000
Actual demand
I
~
\0
~
I
Figure XLI
• 4
CHOWTEST
1000
Two Constants
.' • Face Tissues .
J 20
i
40 60 periods
-192-
Table 46
CHOWTEST: SUMMARY
iterations.
example;
or
(1963)
Sum of forecast errors
M.A.D.
derive from the work of Trigg (1964) and Trigg and Leach
-194-
of errors:
+ aG (I Latest Error')
P = ~ /MAD
t t t ( 18)
Table 47
BATTY MODIFICATION
Stone (1967):
... ( 19 )
The programme BRUFICH includes Trigg and the Trigg and Leach
DEMAND FORECASTING
list."
Transport 31 33 22 38 16 18
more substantial.
planned at present.
system.
ized uses for many hospital items, each with their own
the hospital.
-203-
[4625-4632] .
age [6774-6788].
mean lead time (two and three months are actually program-
more complicated.
error.
Winters Method - included in programme COMPARE, which
is computed.
PERFORMANCE EVALUATION
forecasts were made for each month through the corning two
likely Air Canada would promote him from the system. Two
INTRODUCTION
cen t) .
frequently be found."
programmed:
forecasting methods.
Table 49
FACE TISSUES
Table 50
FORECASTING EFFECTIVENESS
FACE TISSUES
but the two runs tests agree that there is little evidence
pattern.
Since seasonal data is not common in hospital
smoothing.
-215-
Table 51
perform satisfactorily.
••
, . .
./
1
,t
Actual demand
2000
•• ' I Double smoothing
,, = 0.3
I
I '"0\.....
I I
I
I
• Figure XLII
1000
Exponential Forecasting
Two Methods
Face Tissues
9
20 4'0 6'0 periods
Figure XLIII
Exponential Forecasting
Two Methods
140
I
t-J
~
~
I
100 smoothing
·\·-"'1
,~
:, smoothing
••
•• •
., I
.1
ctual
-.\ '
60
\ · 'f\j
\,
\
~....
-.
..
I I
\I
20 \I
______
2'L _J~o _
_ ~~§2 periods
-218-
Table 52
FORECASTING EFFECTIVENESS
1'/
120
I
90 /\ j\ ""
~
I ~I \
n A, I \0
I
60 / '1\ I \ I
30 t ,_ I "- \I \ /
" I \; \/ ,,/
oi \
\ ,i 1\
Pi
I
f
I
\ K = 3
-30 l \ \ I \
-60.J. \1
I, 10 '0 I 30 iQ 5p 6g 79 periods
Figure XLV
RESTRAIN Control Chart
Double Exponential Smoothing
Seasonal Item
60
45
30 ,
N
N
15 l\ I \ I ft I I ,
0
0 I I , I K = 3
-15
-30
-45
-60
o 4 60 eriods
-221-
these charts.
forecasting.
methods.
-222-
DEMAND FORECASTS
tissues of $1.19.
programme.
effectively.
FACE TISSUES
$ $ $ $ $
Forecast No. of Order Holding Shortage Overage Total
Method (Annual) E.O.Q. Orders Cost Cost Costs Costs Cost
$ $ $ $ $
Forecast No. of Order Holding Shortage Overage Total
Method (Annual) E.O.Q. Orders Cost Cost Costs Costs Cost
GYPSONA BANDAGE
$ $ $ $ $
Forecast No. of Order Holding Shortage Overage Total
Method (Annual) E.O.Q. Orders Cost Cost Costs Costs Cost
system, including:
supplies;
caused by over-stocking.
polation method.
puter output.
Figure XI,VI
Q Effect of Servj.ce Levels
on Reorder Level 3
and Safety Stock
Seasonal Item.
250
--- 2
Reorder
Levels LT .. 1
I
150
I
3
I
--
---- - - --- --
50
.-
--
Saf.s,tY- -
..,. -
- - -::: ==--..-- ........
- _-----
--
- ...... ....
..,........
._ - -
--- .--.-
--
--- --- ---- --et-o"c}(S
L_~&.,:_:::__-..L.-.--'-----"----L--_:'_:_--L----'- . _ - 1 -_ _ .. 4 ___ .
forecasting techniques.
Table 56
FACE; TISSUES
Tc.b1e 57
SEASONAL PATTERN
Table 58
TO SERVICE LEVELS
inflationary area."
REFERENCES
1964. An Analysis of
Transformations. Journal of the Royal Statistical
Society, B. 26:211.
· 1 S
S ~ege,. 1956 • Non-Parametric Statistics. New York:
McGraw-Hill.