Fuzzy Back-Propagation Network for PCB Sales

Forecasting

Pei-Chann Chang, Yen-Wen Wang, and Chen-Hao Liu

Department of Industrial Engineering and Management, Yuan-Ze University,

135 Yuan-Dong Rd., Taoyuan 32026, Taiwan, R.O.C.
iepchang@saturn.yzu.edu.tw

Abstract. Reliable prediction of sales can improve the quality of business

strategy. In this research, fuzzy logic and artificial neural network are integrated
into the fuzzy back-propagation network (FBPN) for printed circuit board
industry. The fuzzy back propagation network is constructed to incorporate
production-control expert judgments in enhancing the models performance.
Parameters chosen as inputs to the FBPN are no longer considered as of equal
importance, but some sales managers and production control experts are
requested to express their opinions about the importance of each input
parameter in predicting the sales with linguistic terms, which can be converted
into pre-specified fuzzy numbers, aggregated and corresponding input
parameters when fed into the FBPN. The proposed system is evaluated through
the real life data provided by a printed circuit board company. Model evaluation
results for research indicate that the Fuzzy back-propagation outperforms the
other three different forecasting models in MAPE.

1 Introduction
Sales forecasting is a very general topic of research. When dealing with the problems
of sales forecasting, many researchers have used hybrid artificial intelligent
algorithms to forecast, and the most rewarding method is the application integrating
artificial neural networks (ANNs) and fuzzy theory. This method is applied by
incorporating the experience-based principal and logic-explanation capacity of fuzzy
theory and the capacity of memory and error-allowance of ANNs, as well as self
learning by numeral data.
This research focuses on the sales forecasting of printed circuit board (PCB) and
modifies the fuzzy back-propagation network system (FBPN) proposed by
Chen[2003], to select variables with a better and more systematic way from expert
experience, with the purpose of improving the forecasting accuracy and using this
information to help managers make decisions.

2 Literature Review
Although the traditional sales forecasting methods have been proved effective, they
still have certain shortcomings. (Kuo, 2001, Tang, 2003, Luxhj, 1996) As claimed

L. Wang, K. Chen, and Y.S. Ong (Eds.): ICNC 2005, LNCS 3610, pp. 364 373, 2005.
Springer-Verlag Berlin Heidelberg 2005
 Fuzzy Back-Propagation Network for PCB Sales Forecasting 365

by Kuo[1998], the new developed Artificial Intelligent (AI) models have more
flexibilities and can be used to estimate the non-linear relationship, without the limits
of traditional Time Series models. Therefore, more and more researchers tend to use
AI forecasting models to deal with problem.
Fuzzy theory has been broadly applied in forecasting. (Chen, 1999, Hwang, 1998,
Huarng, 2001) Fuzzy theory is first combined with ANNs by Lin and Lee[1991], who
incorporated the traditional fuzzy controller and ANNs to a network structure to
proceed appropriate non-linear planning of unplanned control systems based on the
relationship of input and output through the learning capacity of ANNs. Following
them, many researchers started doing different relative research based on the
combination of fuzzy theory and ANNs. Fuzzy theory combining with ANNs is
applied in different areas and has positive performance. (Xue, 1994, Dash, 1995,
Chen, 2003, Kuo, 1998)

3 Methodology
There are three main stages in this research and the first stage is the variables
selection stage. This stage is to select many possible variables, which may influence
PCB product sales amount. In order to eliminate the unrelated variables, Stepwise
Regression Analysis (SRA) and Fuzzy Delphi Method (FDM) were used to choose
the key variables to be considered in the forecasting model. The second stage is the
data preprocessing stage and Rescaled Range Analysis (R/S) was used to judge the
effects of trend from serial observation values appearing as the time order. If the
effect of trend is observed, Winters method will be applied to remove the trend effect
and reduce the forecast error. The third stage is the FBPN forecasting stage, which
was developed to forecast the demand of PCB sales amount in this research and will
be described in details in the following section. After being compared with other three
forecasting models, the superior model will be recommended to the decision makers.
The details of each stage will be described as follows:

3.1 Variable Selection Stage

In this stage, fewer factors were considered in order to increase the efficiency of
network learning. Many researchers have used several methods to select key factors in
their forecast system. (Chang, 2000, Kaufmann, 1988, Lin, 2003 and Hsu, 2003) In
this research, the following two methods were used to determine the main factors that
would influence the PCB sales amount.

1. SRA (Stepwise Regression Analysis)

Stepwise regression procedure determines the set of independent variables that most
closely determine the dependent variable. This is accomplished by the repetition of a
variable selection. At each of these steps, a single variable is either entered or
removed from the model. For each step, simple regression is performed using the
previously included independent variables and one of the excluded variables. Each of
these regressions is subjected to an F-test. If the variable small F value, is greater
366 P.-C. Chang, Y.-W. Wang, and C.-H. Liu

than a user defined threshold (0.05), it is added to the model. When the variable large
F value, is smaller than a user defined threshold (0.1), it is removed from the model.
This general procedure is easily applied to polynomials by using powers of the
independent variable as pseudo-independent variables. The statistical software SPSS
for Windows 10.0 was used for stepwise regression analysis in this research.

Variables Selection Stage

1.Market demand domain
Data collection 2.Macroeconomics domain
3.Industrial production domain

SRA FDM Choose key variables

Data Preprocessing Stage

R/S analysis to find the effects of
R/S analysis
trend
no
Trend Effect?
yes

Winter s Winter s method to remove the

method trend effect

FBPN Forecasting Stage Translate the input signal, which

Fuzzy input generated by experts, to the
fuzzy term

General BPN moodel

Weights
Adjustment Defuzzification the output
Defuzzy
signals to the forecasting value
Error measurement

End Training

Fig. 1. Architecture of Three Main Stages in the Research

2. FDM (Fuzzy Delphi Method)

The modified procedures of the proposed FDM for the search are listed as follows:
Step 1:
Collect all the possible factors that may affect the PCB product sales
quantity. The domain experts select the important factors and give each a fuzzy
number. This is the first questionnaire survey.
Step 2:
Formulate the questionnaire, which is a set of IF-THEN rules.
 Fuzzy Back-Propagation Network for PCB Sales Forecasting 367

Step 3:
Fuzzify the questionnaires that are returned by the domain experts and
determine the following indices:
(1). Pessimistic (Minimum) index
l A1 + l A2 + L + l An
lA = (1)
n

where l Ai means the pessimistic index of the i th expert and n is the

number of the experts.
(2). Optimistic (Maximum) index
u A1 + u A2 + L + u An
uA = (2)
n
where u Ai means the pessimistic index of the i th expert.
(3). Average (Most appropriate) index
For each interval l Ai + u Ai , calculate the midpoint, m Ai = (l Ai + u Ai ) / 2 ,
then find A = (m A1 m A2 L m An )1 / n .
Step 4:
Therefore, the fuzzy number A = ( , R , L ) , which represents the mean,
right width, and left width, respectively, for an asymmetric bell shaped function
that can be determined through the above indices:
l A A
R = (3)
3

uA A
L = (4)
3
Step 5:
Formulate the next questionnaire with the above indices and conduct the
survey.
Step 6:
Repeat 3 to 5. Use the following formulas as the stopping criteria to confirm
that all experts have the consentaneous importance of each factor.
1
( A , B ) = =0 ( A[ ] , B [ ])d
(5)
1 1
= ( 2 1 ) ( A[ ] L B [ ] L ) + ( A[ ]U B [ ]u )d
2 =0

where A and B are the fuzzy numbers, A[ ] and B[ ] denote the membership
function of fuzzy numbers. The -cut of the fuzzy number is defined as
{ }
A[ ] = x A[ x] , x R for 0 < 1 . The distance between the two fuzzy
368 P.-C. Chang, Y.-W. Wang, and C.-H. Liu

numbers is ( A , B ) . 1 and 2 are any given convenient values in order to

surround both A[ ] = 0 and B[ ] = 0 .

3.2 Data Preprocessing Stage

When the seasonal and trend variation is present in the time serious data, the accuracy
of forecasting will be influenced. This stage will use R/S analysis to detect if there is
this kind of effects of serious data. If the effects are observed, Winters exponential
smoothing will be used to take the effects of seasonality and trend into consideration.

1. R/S analysis (Rescaled Range Analysis)

For eliminating possible trend influence, the rescaled range analysis, invented by
Hurst (1965), is used to study records in time or a series of observations in different
time. Hurst spent his lifetime studying the Nile and the problems related to water
storage. The problem is to determine the design of an ideal reservoir on the basis of
the given record of observed discharges from the lake. The detail process of R/S
analysis will be omitted here.

2. Winters Exponential Smoothing

In order to take the effects of seasonality and trend into consideration, Winters
exponential smoothing is used to preliminarily forecast the quantity of PCB
production. According to this method, three components to the model are assumed: a
permanent component, a trend, and a seasonal component. Each component is
continuously updated using a smoothing constant applied to the most recent
observation and the last estimate. Luxh[1996] and Mills[1990] compared Winters
Exponential Smoothing with other forecasting methods, like ARIMA, and all showed
that the Winters method had a superior performance. In this research we assume
= 0.1 , = 0.1 and = 0.9 .

3.3 Fuzzy Neural Network Forecasting Stage

There are three main layers, input layer, hidden layer and output layer, and two
training stages in our FBPN. In the feedforward stage, FBPN use the data on hand to
forecast the PCB sales amount, and the forecasting error will be recalled to adjust the
weights between layers in the backprooagation of error stage. The details will be
described in the following:
Step0. Initial weights between layers are randomly generated.
Step1. While stopping condition is false, do step 2-11.
Step2. For each training pair, do step 3-8.
Feedforward stage:
Step3. Each input unit I j , which was generated by many experts, receives input
signal ~s x and broadcasts this signal to all units in the hidden layer.
(i ) (i )
 Fuzzy Back-Propagation Network for PCB Sales Forecasting 369

Where ~
s(i ) is the fuzzy membership function, which is supported by the
experts, and x (i ) is the normalized input signal.
Step4. Sum the weighted input signals of each hidden unit.
Step5. Apply the translation function to compute its output signals.
Step6. Sum the weighted input signals of each output unit.
Step7. Apply the translation function to compute its output signals.
Step8. Defuzzify the output signals to the forecasting value, and compute its
MAPE.
Backpropagation of error stage:
Step9.Compare the forecasted output with the actual sales amount and compute
the error term between hidden layer and output layer. Next, calculate its
weight correction term, (used to update connection weights latter). Finally,
calculate its bias correction term, and update weights and biases.
Step10. Compute its error information term for hidden nodes. Then, update the
information term of each hidden node.
Step11.Calculate its weight correction term between hidden layer and input layer.
Then, calculate its bias correction term. Finally, update weights and biases.

Generate the initial weights of the network

Input layer node receives fuzzy input signal

Feedforward stage
Translate and compute the forecasting

Defuzzification the output signals

Compute the MAPE of forecasting

Backpropagation of error stage

Computes the error information term

Update all weights and biases

no Satisfy stopping
condition?
yes

Stop Network Training

Fig. 2. The detailed flow diagram of FBPN

370 P.-C. Chang, Y.-W. Wang, and C.-H. Liu

The configuration of the FBPN is established as follows:

z number of neurons in the input layer: 5
z number of neurons in the output layer: 1
z single hidden layer
z number of neurons in the hidden layer: 5
z network-learning rule: delta rule
z transformation function: sigmoid function
z learning rate: 0.1
z learning times: 30000

4 Experimental Results

The data in this research are from an electronic company in Taiwan from 1999/1 to
2003/12. Monthly sales amount is considered as an objective of the forecasting
model. This research develops a FBPN for sales forecasting in PCB industries and we
will compare this method with other traditional methods such as Grey Forecasting
(GF), Multiple Regression Analysis (MRA) and Back-propagation network
(BPN), etc.
Mean average percentage error (MAPE) was applied as a standard performance
measure for all four different models in this research. After the intensive experimental
test, the MAPEs of four different models are 15.04%, 8.86%, 6.19% and 3.09% (as
shown in table 1). Among that, the grey forecasting has the largest errors, and then
MRA, BPN, and the least is FBPN.

Table 1. Comparisons among Four Different Forecasting Models

MAPE Improvement Rate

GF 15.04% 74.95%
MRA 8.86% 65.21%
BPN 6.19% 50.08%
FBPN 3.09% -

As can be seen in fig 3, the GF has a significant up and down in the beginning and
it also over estimate the data up to the end. Thus the overall MAPE is high. As for
MRA, the tendency is formed and the up and down is minor compared with GF. The
overall MAPE is around 0~20% and it is also a little higher. Traditional BPN model
is in a stable situation and the overall MAPE is smaller than MRA and it is around
0~10%. The same situation exist for FBPN although in the beginning it has a larger
error however it converge quickly and the overall MAPE is still around 0~10%.
Especially, it performs very well in the end since it is very close to the real data.
Therefore, the FBPN performs the best among others.
 Fuzzy Back-Propagation Network for PCB Sales Forecasting 371

Fig. 3. The MAPE Values for Four Different Forecasting Models

According to the various criteria, i.e., encompassing test, MAPE, and forecasting
accuracy, the best model among these four different models is FBPN with a MAPE of
3.09% and accuracy of 97.61%. Therefore, we can claim that by combining the fuzzy
theory and BPN the hybrid model can be applied in forecasting the sales of PCB
industry and the result is very convincing and deserve further investigation in the
future for applications in other areas.
Although, the GF and MRA is very powerful when the data is very scarce and they
claim that with only four data points and they can be applied to forecast the future
result. However, after intensive experimental test, these two methods did not perform
very well especially for those non-linear and highly dynamic data. As for the fuzzy
Delphi back-propagation model since it can include the opinion from various experts
in PCB sales and production department. It seems the assignment of different weight
to the factor really improve the forecasting errors and perform much better than other
models.

5 Conclusions
The experimental results in section 4 demonstrated the effectiveness of the FBPN that
is superior to other traditional approaches. The FBPN approach also provides another
informing tool to the decision maker in PCB industries. In summary, this research has
the following important contribution in the sales forecasting area and these
contributions might be interested to other academic researchers and industrial
practitioners:
1. Feature Selections:
To filter out significant factors from a series of input variables, the FDM is
superior to the SRA method. FDM will collect the opinion from various experts and
assign different weights to these variables according to their experiences in this field.
372 P.-C. Chang, Y.-W. Wang, and C.-H. Liu

Therefore, it is very easy to extract important factors from these various variables. In
contrary, gradual regression analysis may come out with a combination of various
variables which is mutually correlated. However, the effect of these selected
variables may not significant enough to be included in the final inputs. The errors for
input from fuzzy Delphi is 12.88%, and errors from SRA is 13.87%. It is obvious to
see that FDM is more effective for applications.
2. The effect of tendency:
When take tendency effect into consideration, the overall errors are decreased.
Tendency and seasonality are included in the time series data and these two factors
will affect the accuracy of the forecasting method dramatically. This research applies
the Winters trend and seasonality exponential smoothing modelto forecast the
sales and then convert this data as an input to the BPN model. After the training
procedure, the final errors, no matter it is from FDM or SRA, are decreased
significantly. Errors from gradual regression analysis decreased from 13.84% to
7.15%and FDM from 12.88% down to 6.19%%. This shows the significance of
including Winters trend and seasonality exponential smoothing model in the
model.
3. Comparisons of different forecasting models:
This research applies three different performance measures, i.e., encompassing test,
forecasting errors and accuracy of forecasting to compare the FBPN with other three
methods, i.e., GF, MRA and BPN. The intensive experimental results show the
following: 1. In encompassing test, FBPN and BPN models are superior to GF and
MRA. 2. As for MAPE, FBPN has the smallest MAPE and it is only 3.09%.
Therefore, FBPN model by combining FDM and BPN model is a very powerful and
effective forecasting tool that can be further applied in other field of applications
since experts opinion can be incorporated into the model.

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