This document describes the consumption method for forecasting health commodity needs. It involves using historical consumption data to project future needs. The key steps are: (1) establishing a list of commodities and reviewing past consumption data, (2) calculating the average monthly consumption adjusted for stockouts, (3) projecting future consumption based on adjustments for expected changes, (4) calculating total quantities needed for the forecast period, (5) determining procurement quantities based on current stock levels, and (6) calculating total costs. The method assumes past consumption patterns will continue but limitations include irregular consumption or supply issues impacting past data.

1. FORECASTING
CONSUMPTION METHOD
DR. MOE KYAW KYAW
GHSC-PSM, MYANMAR
MARCH, 2017

2. Forecasting Methods
Two principle methods
1. Consumption/Logistics-based
2. Morbidity
◦ Population base morbidity method
◦ Service Statistics
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3. Consumption method
Use the historical consumption data
Most suitable for forecasting in a health care
facilities or a program where the consumption of
the medicines and health commodities are stable
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4. Assumption and limitations – 1
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Assumptions Limitations
1. Historical consumption
patterns are expected to
continue
 Not accurate for irregular
consumption pattern
 Not applicable if there is no past
consumption
o new formulations,
o new treatment and
o new programs
2. Consumptions
data/reports are accurate
and comprehensive
 Not accurate if reporting rate is low,
the consumption could be lower than
actual

5. Assumption and limitations – 2
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Assumptions Limitations
3. System at full supply
from higher level
 If there is interrupted supply from
higher level, the consumption could be
lower than actual demand
4. System at demand base
supply from higher level
 If there is push supply from a higher
level, the consumption could be higher
than actual demand
5. Rational Use of
medicines
 If there is irrational use exist in the
system, the forecast will continue the
same irrational use pattern

6. Data Requirement for consumption method
List of health commodities with minimum
specifications
Consumption data – in a specified period
o End-user Consumption (at dispensing points)
o Proxy consumption (Issues data)
** the closer to the end user, the higher the accuracy
Stock out periods to adjust the consumption
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7. Projected consumption
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8. CALCULATION STEPS
consumption method
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9. Step 1: Establish the list of medicines to be
quantified
Generic Names of medicines with minimum
specifications of:
◦ Strength
◦ Basic Unit
◦ Form
◦ Accounting units
◦ Price per accounting unit
Other specification for analysis
◦ Item categories
◦ VEN status
◦ Suppliers
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10. Step 2: Determined the period of time to be
reviewed for consumption
Usually most recent 1 year consumption data is
recommended to use
o Seasonal variation
o Uneven distribution when main store indent data is
used
o recent consumption trends
Monthly or Quarterly consumption data is used
according to data availability
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11. Step 3: Enter consumption and stock-out data
for each commodity
Adjust consumption for incomplete reporting
Method 1: Substitute the consumption data from
pervious moth(s) for each ward/ end-user
Method 2: Adjust for under reporting
*SDP = Service Delivery Points
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Total numbers of SDP
Reported SDP
Adjusted
estimates
X Reported Consumption=

12. Step 4: Calculate Average monthly
consumption adjusted for stock out
(Adjusted AMC)
AMCA = CT ÷ [RM – (DOS ÷ 30.5)]
AMCA = Average monthly consumption, adjusted for stock-outs
CT = Total consumption during the review period
RM = Total consumption review period in months
DOS = Number of days an item was out of stock during the review
period
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13. Adjusted AMC - Example
CT = Total consumption = 6,600 units
RM = Review period = 6 months
DOS = Out of stock = 15 days
Adjusted AMC (AMCA)
= 6,600 ÷ [6 – (15/30.5)]
= 6,600 ÷ 5.5
= 1,200 units
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14. Step 5: Calculate the Projected AMC
AMCP = AMCA  (AMCA x AU)
AMCP = Projected average monthly consumption
AMCA = Average monthly consumption, adjusted for stock-outs
AU = Utilization adjustment (% increase/decrease)
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15. Projected AMC - Example
Calculate the projected AMC for 5% increase.
AMCP = 1,200 +(1,200 x 5%)
= 1,200 + 60
= 1,260
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16. Step 6: Calculate the total quantity of each
commodity required for forecast period
QT = FP x AMCP
QT = Total quantity for forecast period
FP = Forecast period in months
AMCP = Projected AMC
Example: QT = 1,260 x 12 = 15,120 units.
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17. Step 7: Calculate the quantity of each
commodity required for procurement
PQ = QT - SOH
PQ = Quantity to be procured
QT = Total quantity for forecast period
SOH = Stock On Hand = 5,120
Example: PQ = 15,120 – 5,120 = 10,000 units.
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18. Step 8: Calculate the cost of each product
required for the period
CT = QT x Unit Cost
CT = Cost of product for forecast period = 20k
Example: CT = 10,000 x 20 = 200,000 Kyats
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