INTRODUCTION

Forecasting is the process of estimation in unknown situations. Prediction

is a similar, but more general term. Both can refer to estimation of time
series, cross-sectional or longitudinal data. Usage can differ between
areas of application: for example in hydrology, the terms "forecast" and
"forecasting" are sometimes reserved for estimates of values at certain
specific future times, while the term "prediction" is used for more general
estimates, such as the number of times floods will occur over a long
period. Risk and uncertainty are central to forecasting and prediction.
Forecasting is used in the practice of Customer Demand Planning in
everyday business forecasting for manufacturing companies. The
discipline of demand planning, also sometimes referred to as supply chain
forecasting, embraces both statistical forecasting and a consensus
process.

1
ABOUT BPCL
Bharat Petroleum Corporation Limited (BPCL) is one of India's largest PSU
companies, with Global Fortune 500 rank of 287 (2008). Its corporate
office is located at Ballard Estate, Mumbai. As the name suggests, its
interests are in petroleum sector. It is involved in the refining and retailing
of petroleum products.

Bharat Petroleum is considered to be a pioneer in Indian petroleum

industry with various path-breaking initiatives such as Pure for Sure
campaign, Petro card, Fleet card etc.

BPCL's growth post-nationalisation (in 1976) has been phenomenal. One

of the single digit Indian representatives in the Fortune 500 & Forbes 2000
listings, BPCL is often referred to as an “MNC in PSU garb”. It is considered
a pioneer in marketing initiatives, and employs “Best in Class” practices.

History
The 1860s saw vast industrial development. A lot of petroleum refineries
came up. An important player in the South Asian market then was the
Burmah Oil Company Ltd. Though incorporated in Scotland in 1886, the
company grew out of the enterprises of the Rangoon Oil Company, which
had been formed in 1871 to refine crude oil produced from primitive hand
dug wells in Upper Burma.

The search for oil in India began in 1886, when Mr. Goodenough of
McKillop Stewart Company drilled a well near Jaypore in upper Assam and
struck oil. In 1889, the Assam Railway and Trading Company (ARTC)
struck oil at Digboi marking the beginning of oil production in India.

While discoveries were made and industries expanded, John D Rockefeller

together with his business associates acquired control of numerous
refineries and pipelines to later form the giant Standard Oil Trust. The
largest rivals of Standard Oil - Royal Dutch, Shell, Rothschilds - came
together to form a single organisation: Asiatic Petroleum Company to
market petroleum products in South Asia.

In 1928, Asiatic Petroleum (India) joined hands with Burmah Oil Company -
an active producer, refiner and distributor of petroleum products,
particularly in Indian and Burmese markets. This alliance led to the
formation of Burmah-Shell Oil Storage and Distributing Company of India
Limited. A pioneer in more ways than one, Burmah Shell began its
operations with import and marketing of Kerosene. This was imported in
bulk and transported in 4 gallon and 1 gallon tins through rail, road and
country craft all over India. With motor cars, came canned Petrol, followed

2
by service stations. In the 1930s, retail sales points were built with
driveways set back from the road; service stations began to appear and
became accepted as a part of road development. After the war Burmah
Shell established efficient and up-to-date service and filling stations to
give the customers the highest possible standard of service facilities.

From Burmah Shell to Bharat Petroleum

On 24 January 1976, the Burmah Shell Group of Companies was taken

over by the Government of India to form Bharat Refineries Limited. On 1
August 1977, it was renamed Bharat Petroleum Corporation Limited. It
was also the first refinery to process newly found indigenous crude
Bombay High, in the country.

Products

Bharat Petroleum produces a diverse range of products, from

petrochemicals and solvents to aircraft fuel and speciality lubricants and
markets them through its wide network of Petrol Stations, Kerosene
Dealers, LPG Distributors, Lube Shoppes, besides supplying fuel directly to
hundreds of industries, and several international and domestic airlines.

Refineries
BPCL has Refineries at Mumbai and Kochi(Kochi Refineries) with a capacity
of 12 Million Metric Tonnes (MMT) and 7.5 MMTPA respectively for refining
crude oil. BPCL's subsidiary at Numaligarh has a capacity of 3 MMT.

Brand ambassador
Mahendra Singh Dhoni signed on as the Brand Ambassador for BPCL in
2006. Narain Karthikeyan is one other Brand Ambassador for BPCL.

International rankings
BPCL is a Fortune Global 500 company as per the ranking of 2008. It was
ranked at position 287. It was ranked at position 325 as per the ranking of
2007.

BPCL was featured on the Forbes Global 2000 list for 2008 at position 967

3
FORECASTING TECHNIQUES:
Sales forecasting is a difficult area of management. Most managers
believe they are good at forecasting. However, forecasts made usually
turn out to be wrong! Marketers argue about whether sales forecasting is
a science or an art. The short answer is that it is a bit of both.

Reasons for undertaking sales forecasts

Businesses are forced to look well ahead in order to plan their

investments, launch new products, decide when to close or withdraw
products and so on. The sales forecasting process is a critical one for most
businesses. Key decisions that are derived from a sales forecast include:

- Employment levels required

- Promotional mix
- Investment in production capacity

4
CLASSIFICATION
It is classified on the basis of the type of input data used by sales
manager in forecasting demand

 Qualitative

 Quantitative

Qualitative Method

 Intuitive

 Subjective

 Judgemental

Quantitative Method

 Time Series Analysis

 Method of Moving Average

 Exponential Smoothing Method

5
DATA COLLECTION AND ANALYSIS
The data is collected from the retail outlet and the data shows the
forecasting technique used by them is QUALITATIVE so we will compare
the current forecasting method with 3 quantitative forecasting methods
and will analyze.

DATASET
PETROL HSD SPEED

1-Jan 28 20 12

1-Feb 44 24 12

1-Mar 40 20 8

1-Apr 56 16 12

1-May 68 24 4

1-Jun 52 20 4

1-Jul 44 22 8

NOTE: HSD :HIGH SPEED DIESEL

FORECASTING
PETROL HSD SPEED

1-Jan 28 20 12

1-Feb 44 24 12

1-Mar 40 20 8

1-Apr 56 16 12

1-May 68 24 4

1-Jun 52 20 4

1-Jul 44 22 8

1-Aug 56 16 4

6
QUANTITATIVE METHODS
TIME SERIES METHOD:

A time series is a sequence of data points, measured typically at

successive times, spaced at (often uniform) time intervals. Time series
analysis comprises methods that attempt to understand such time series,
often either to understand the underlying context of the data points
(Where did they come from? What generated them?), or to make forecasts
(predictions).

PETROL HSD SPEED

1-Jan 28 20 12

1-Feb 44 24 12

1-Mar 40 20 8

1-Apr 56 16 12

1-May 68 24 4

1-Jun 52 20 4

1-Jul 44 22 8

1-Aug 60.65625 21.22975 8.416932

OBSEVATION:

As we observe the initial forecast done by the retail outlet is purely

judgmental and as a result of which the trend is much haphazard but
when we adopt time series method the haphazardness is stabilized to a
7
extent , for further stabilization we need to focus on more techniques
which we are going to analyze.

EXPONENTIAL SMOOTHING

DAMPING FACTOR :- 0.5

Exponential smoothing is a technique that can be applied to time series

data, either to produce smoothed data for presentation, or to make
forecasts. The time series data themselves are a sequence of
observations. The observed phenomenon may be an essentially random
process, or it may be an orderly, but noisy, process. Whereas in the simple
moving average the past observations are weighted equally, exponential
smoothing assigns exponentially decreasing weights as the observation
get older.

PETROL HSD SPEED

1-Jan #N/A #N/A #N/A

1-Feb 28 20 12

1-Mar 36 22 12

1-Apr 38 21 10

1-May 47 18.5 11

1-Jun 57.5 21.25 7.5

1-Jul 54.75 20.625 5.75

1-Aug 49.375 21.3125 6.875

OBSERVATION:

This technique is used to smooth the trend line of the forecast, this
technique is used for the actual forecast done by the retail outlet and we
can see that it smoothen the trend line and now the trend can be easily
forecasted.

MOVING AVERAGE:
8
A moving average, also called rolling average, rolling mean or running
average, is a type of finite impulse response filter used to analyze a set of
data points by creating a series of averages of different subsets of the full
data set. A moving average is not a single number, but it is a set of
numbers, each of which is the average of the corresponding subset of a
larger set of data points. A moving average may also use unequal weights
for each data value in the subset to emphasize particular values in the
subset.

MONTH PETROL PETROL(M.A.- HSD HSD(M.A.--3) SPEED SPEED(M.A.--

-3) 3)

1-Jan 28 N/A 20 N/A 12 N/A

1-Feb 44 N/A 24 N/A 12 N/A

1-Mar 40 37.33333333 20 21.3333333 8 10.66666667

3

1-Apr 56 46.66666667 16 20 12 10.66666667

1-May 68 54.66666667 24 20 4 8

1-Jun 52 58.66666667 20 20 4 6.666666667

1-Jul 44 54.66666667 22 22 8 5.333333333

1-Aug 56 50.66666667 16 19.3333333 4 5.333333333

3

OBSERVATION

We have taken 3 months moving average method and as we can see the
forecast details predicted by this technique is much similar to the actual

9
 demand. The trend is clearly predictable and it is also very easy so that
even a lay man can do this.

RECOMMENDATION
As the working capital for the retail outlet is not a big issue for Mr.Sanwarmal so the
recommended action for him will be rather going conservative and losing so much ,
He should adapt the MOVING AVERAGE TECHNIQUE for his forecasting.

BIBLIOGRAPHY

➢ HAVALDAR CAVALE,SALES AND DISTRIBUTION

MANAGEMENT
➢ WWW.WIKIPEDIA.ORG
➢ WWW.BPCL.CO.IN

10