The Study of Irregular Demand Forecasting for Medicines: The Case Study of ABC Medical Center Hospital

Abstract

With the new medical center hospital of ABC university opened in 2018, a rapid increase in patients leads to a need to improve in pharmacy operations. Especially the case study hospital is now affected by the irregular demand in some medicine which was difficult to forecast and lead to inefficient inventory management. The main objective of this paper is to find a method to forecast a medicine with an irregular demand pattern. Firstly, the Coefficient of variation and Average inter-demand Interval were used for defining the medicine demand pattern. Secondly, forecasting error compared from applying four general forecasting models including Moving Average, Weight Moving Average, Exponential Smoothing, and Holt Winter Additive. Thirdly, apply a more specific model for Irregular forecasting, including Croston's method, TSB method (Teunter, Syntetos, and Babai's method), SBA method (Syntetos-Boylan approximation method), and Kalaya et al’ approach (2019) approach to see if it is superior to the general models. The finding found better results when using a specific model for irregular demand forecasting.