Forecasting Weekly Material Cost for a Daily Newspaper in Sri Lanka

Abstract

In newspaper printing different types of costs occurred such as labour cost, material cost, and electricity expenditures. Among them material cost of a newspaper become a main key point in newspaper manufacturing cost. Pricing of the newspaper is depending on the material cost associated with the newspaper. Therefore, having a model to forecast will be beneficial for the company in budget planning and pricing. In this study the analysis was carried out by using weekly data of material cost (paper, plate and 4 colour inks separately) from January 2013 to July 2014 for a daily newspaper from leading newspaper company in Sri Lanka. Main objective of this research is to fit a suitable model for forecasting material cost. The data set was divided into two parts; one for model fitting and other for model validation. Univariate time series model was fitted to the data. Different Auto Regressive Integrated Moving Average (ARIMA) models were fitted for those data and best model for forecasting was identified by using minimum Mean Absolute Percentage Error (MAPE) value. ARIMA (2, 1, and 1) model with minimum MAPE 16.13% was identified as the best model for total material cost forecasting. ARIMA(1,1,2), ARIMA(0,1,1), ARIMA(1,1,2), ARIMA(3,1,2) , ARIMA(3,1,2) , ARIMA(1,1,2) for paper, plate, cyan ,magenta ,yellow and black ink costs respectively with minimum MAPE values 23.86 %, 7.9%, 8.33% , 8.5426 % , 8.29% and 8.9%. Models for material costs separately have a minimum MAPE value than taking the total material cost. It can be conclude that it is better to use fitted models separately for material cost for forecasting.