Neural Networks 15 (2002) 909925

www.elsevier.com/locate/neunet

An intelligent sales forecasting system through integration of artificial

neural networks and fuzzy neural networks with fuzzy weight elimination
R.J. Kuoa,*, P. Wub, C.P. Wangc
a
Department of Industrial Engineering, National Taipei University of Technology, No. 1, Section 3, Chung-Hsiao East Road, Taipei 106, Taiwan, ROC
b
Department of Industrial Engineering and Management, I-Shou University, Kaohsiung County 840, Taiwan, ROC
c
Graduate School of Management Science, I-Shou University, Kaohsiung County 840, Taiwan, ROC
Received 3 August 1999; revised 10 May 2002; accepted 10 May 2002

Abstract
Sales forecasting plays a very prominent role in business strategy. Numerous investigations addressing this problem have generally
employed statistical methods, such as regression or autoregressive and moving average (ARMA). However, sales forecasting is very
complicated owing to influence by internal and external environments. Recently, artificial neural networks (ANNs) have also been applied in
sales forecasting since their promising performances in the areas of control and pattern recognition. However, further improvement is still
necessary since unique circumstances, e.g. promotion, cause a sudden change in the sales pattern. Thus, this study utilizes a proposed fuzzy
neural network (FNN), which is able to eliminate the unimportant weights, for the sake of learning fuzzy IF THEN rules obtained from the
marketing experts with respect to promotion. The result from FNN is further integrated with the time series data through an ANN. Both the
simulated and real-world problem results show that FNN with weight elimination can have lower training error compared with the regular
FNN. Besides, real-world problem results also indicate that the proposed estimation system outperforms the conventional statistical method
and single ANN in accuracy. q 2002 Elsevier Science Ltd. All rights reserved.
Keywords: Sales forecasting; Artificial neural networks; Fuzzy neural networks; Fuzzy weight elimination

1. Introduction the candidates for decision makers. However, these methods

To enhance the commercial competitive advantage in
a constantly fluctuating environment, an organizations
management must make the right decision in time
depending on the information at hand. However, the
decision lead time ranges from several years to several
hours based on the types of business. Thus, making an
accurate decision in time plays a prominent role.
Intuitively, historical data can provide a feasible estimate
through the forecasting models. Therefore, if the marketing
department can estimate the sales quantity for the next
period, the materials department can then effectively control
the inventory to achieve just-in-time (JIT). In addition, the
production department can make the scheduling and arrange
the facility utilization. Such an action may cause the
production cost to decrease. Thus, obtaining an accurate
forecast most likely appears to be critical. Statistical
methods, such as regression model and ARMA, have been
* Corresponding author. Tel.: 886-2-2771-2171x2341; fax: 886-2-
2731-7168.
E-mail address: rjkuo@ntut.edu.tw (R.J. Kuo).
0893-6080/02/$ - see front matter q 2002 Elsevier Science Ltd. All rights reserved.
PII: S 0 8 9 3 - 6 0 8 0 ( 0 2 ) 0 0 0 6 4 - 3
are only efficient for data, which are seasonal or cyclical. If
the data are influenced by the special case, like promotion,
they are not feasible. Though artificial neural networks
(ANNs) which are better than the conventional statistical
methods (Agrawal & Schorling, 1997; Chakraborty,
Mehrotra, & Mohan, 1992; Kumar, Rao, & Soni, 1995;
Lachtermacher & Fuller, 1995) have been recently
employed, yet the problem still arises. These researches
do put the promotion into consideration. Nonetheless, it is
treated as an easy way, like one input of the ANN. Thus, this
study first attempts to propose a fuzzy neural network
(FNN) which is able to learn the fuzzy IF THEN rules
obtained from the marketing experts with respect to the
promotion. Though FNN concept and learning algorithm
have first been presented by Lin and Lee (1991), it is only
for the real inputs and real outputs. The FNN proposed in
this study is not only able to learn the fuzzy IF THEN
rules (or fuzzy inputs and outputs), but also posses the fuzzy
weights. In addition, it can also eliminate the unimportant
weights during training. This can lead to better convergence
according to the simulated results in the present study. The
910 R.J. Kuo et al. / Neural Networks 15 (2002) 909925

Nomenclature
p the sample number
Xp the input vector of sample p
Tp the target vector of sample p
Opk the output of kth output node
Oph the output of hth hidden node
Wih the connection weight from ith input node to hth hidden node
Whk the connection weight from hth hidden node to kth output node
Netpk the net internal activity level of kth output node
Netph the net internal activity level of hth hidden node
Qj the bias of jth output node
Ep the cost function for sample p
Eps the cost function of s-levels a-cut set for sample p
L
Epks the cost function of the lower boundary for s-levels a-cut set of sample p
L
Epks the cost function of the upper boundary for s-levels a-cut set of sample p
X
p the fuzzy input for sample p
O
p the fuzzy output for sample p
W
ih ; W

hk the fuzzy weights
Q
h ; Q
k the fuzzy biases
h the learning rate
a the momentum term
p
aL ; p aU the lower limit and the upper limit of the a-cut of fuzzy number

main reason to propose such FNN is that the promotion
effect on sales is always very vague, or fuzzy.
In addition to obtaining the promotion effect on sales, it
is also necessary to provide the forecast of the sales.
Therefore, this study also aims to develop an intelligent
sales forecasting system, which consists of three parts: (1)
data collection, (2) special pattern model (FNN), and (3)
decision integration (ANN). To evaluate the proposed
system, the real-world data provided by a well-known
convenience store (CVS) company in Taiwan are used,
while the promotion effect is obtained by surveying the
experts in the retailing. According to these results, the
proposed system performs more accurately than the con-
ventional statistical method and single ANN, particularly
when the promotion is conducted.
The rest of this paper is organized as follows. Section 2
provides some necessary background information while the
proposed system is discussed in Section 3. Section 4
presents the simulation results of FNN, while the evaluation
results are summarized in Section 5. Discussion and
concluding remarks are finally made in Sections 6 and 7,
respectively.
2. Background
In this section, sales forecasting systems and applications
of artificial neural networks in sales forecasting are briefly
reviewed. In addition, fuzzy neural networks are also
discussed in the following.
2.1. Artificial neural networks in sales forecasting
In an enterprises decision support system, sales fore-
casting always plays a prominent role. An accurate sales
forecasting in advance is able to help the decision maker
calculate production and materials costs, even determine the
sale price (LeVee, 1992 1993). This will lead to a lower
inventory level and achieve the objective of just-in-time.
Among the conventional sales forecasting methods (Chase,
1993; Florance & Sawicz, 1993; Meyer, 1993), most of
them used either factors or time series data to determine the
forecast. However, the relationship between the factors or
the past time series data (independent variables) and the
sales (dependent variable) is always quite complicated.
Obtaining the promising results through the above-
mentioned approaches is quite difficult. Therefore, various
decision makers prefer using their own intuition, instead of
model-based approaches (i.e. time series or regression
models). However, a model-free approach, ANN, is applied
in the area of forecasting recently owing to its adequate
performance in control and pattern recognition.
Artificial neural network (ANN) models are built on
networks of processing units called neurons that are arranged
in layers and are connected to one another by restricted links.
Links between neurons have associated weights. Many studies
have attempted to apply ANNs to time-series forecasting.
However, their conclusions are often contradictory. Some
studies found out that ANNs are better than conventional
methods (Weigen, Rumelhart, & Huberman, 1991), while
others concluded an opposite conclusion (Tang, Almeida, &
Fishwick, 1991). A weight-elimination back-propagation
 R.J. Kuo et al. / Neural Networks 15 (2002) 909925
learning procedure to effectively deal with the overfitting
problem is introduced by Weigen et al. (1991). It was also
applied to sunspots and an exchange rate time series. Tang
et al. (1991) compared the ANN and Box Jenkins models,
using international airline passenger traffic, domestic car
sales and foreign car sales in the USA. They concluded that
the Box Jenkins models outperformed the ANN models in
short-term forecasting. On the other hand, the ANN models
outperformed the Box Jenkins in long term forecasting.
In order to predict the flour prices in three cities in USA,
Chakraborty et al. (1992) presented an ANN approach to
multivariate time-series analysis. They showed that the
result is quite accurate. According to their results, the ANN
approach is a leading contender among statistical modeling
approaches. Lachtermacher and Fuller (1995) developed a
calibrated ANN model. The model used Box Jenkins
methods to identify the lag components of the data,
which should be used as input variables. In addition, it
employed a heuristics to suggest the number of hidden units
needed in structuring the model. In examining the stationary
series, they observed that the calibrated ANN models have
only a slightly better overall performance than the
conventional time-series methods used in the benchmark.
In the case of a non-stationary series, the calibrated ANN
models outperformed the ARMA model for three of the four
series, and almost as well as the ARMA in fourth series. The
above survey indicates that ANN is more appropriate for the
time series data. Ansuj, Camargo, Radharamanan, and Petry
(1996) compared the time series model with interventions
and ANN model in analyzing the behavior of sales in a
medium size enterprise. The results showed that ANN
model is more accurate. Kumar et al. (1995) found that
ANN does quite well compared to logistic regression in
predicting a dichotomous choice in presence of several
independent variables. However, considering only some
series data may result in a worse forecast. Including both the
time series data and factors in the forecasting model seems
to be preferable.
Recently, Bigus (1996) used promotion, time of year, end
of month flag, and weekly sales as inputs for the ANN in
order to forecast the weekly demand. The results seem very
promising. Agrawal and Schorling (1997) also have shown
that ANN is able to predict brand shares quite well even
when price promotions, feature, and display are present in
the data set.
2.2. Fuzzy neural networks
ANNs and the fuzzy model have been used in many
application areas (Lee, 1990; Lippmann, 1987; Zadeh,
1973), each pairing its own advantages and disadvant-
ages. Therefore, how to combine these two approaches
successfully has become a relevant concern of further
studies.
Two major parts have recently received much interest:
(1) fuse ANN and fuzzy logic and (2) integrate ANN and
911
fuzzy logic. In the first one, the traditional fuzzy system
mentioned above is based on experts knowledge. However,
it is not very objective. Besides, acquiring robust knowledge
and finding available human experts are extremely difficult.
Now, ANNs learning algorithm has been applied to
enhance the performance of a fuzzy system and demon-
strated to be an innovative approach. In addition, fuzzy IF
THEN rules were generated and adjusted by learning
methods using numerical data. Takagi and Hayashi (1991)
introduced a feedforward ANN into fuzzy inference. An
ANN represents a rule, while all the membership functions
are represented by only one ANN. Jang (1991, 1992) and
Jang and Sun (1993) proposed a method which transforms
the fuzzy inference system into a functional equivalent
adaptive network, and then employs the EBP-type algorithm
to update the premise parameters and a least squares method
to identify the consequence parameters. Meanwhile, Fukuda
and Shibata (1992), Shibata, Fukuda, Kosuge, and Arai
(1992) and Wang and Mendel (1992) also presented similar
methods. Nakayama, Horikawa, Furuhashi, and Uchikawa
(1992) proposed a so-called FNN which has a special
structure for realizing a fuzzy inference system. Each
membership function consists of one or two sigmoid func-
tions for each inference rule. Lin and Lee (1991) proposed
the so-called Neural-Network-Based Fuzzy Logic Control
System (NN-FLCS). They introduced the low-level learning
power of neural networks in the fuzzy logic system and
provided high-level human-understandable meaning to the
normal connectionist architecture. In addition, Kuo (1994)
and Kuo and Cohen (1998, 1999) introduced a feedforward
ANN into fuzzy inference represented by Takagi Sugeno
model.
The above-mentioned FNNs are only appropriate for
numerical data. However, the experts knowledge is always
fuzzy type. Thus, some researchers have attempted to
address this problem. Gupta and Knopf (1990) and Gupta
and Qi (1991, 1992) presented some models with fuzzy
neurons, but no learning algorithms were proposed in the
paper. However, in a series of papers as cited in a survey
paper (Buckley & Hayashi, 1994), the authors discussed the
learning algorithms and applications for fuzzy neural
networks with fuzzy inputs, weights and outputs (Buckley
& Hayashi, 1992; Hayashi, Buckley, & Czogula, 1993).
Ishibuchi, Kwon and Tanaka (1995a) and Ishibuchi, Okada,
Fujioka, and Tanaka (1993) also proposed learning methods
of neural networks to utilize not only numerical data but
also expert knowledge represented by fuzzy IF THEN
rules. Lin (1995) and Lin and Lu (1995) also presented an
FNN, capable of handling both the fuzzy inputs and outputs.
Based on Ishibuchis work, Kuo and Xue (1999) presented
an FNN, which does not only posses the asymmetric fuzzy
inputs and outputs, but also the asymmetric fuzzy weights.
Moreover, genetic algorithm was integrated with the
proposed FNN in order to yield better results both in
speed and accuracy (Kuo, Chen, & Hwang, 2001).
912 R.J. Kuo et al. / Neural Networks 15 (2002) 909925
Fig. 1. The architecture of the proposed forecasting system.
3. Methodology
Section 2 has emphasized the relevance of sales
forecasting as well as some necessary background infor-
mation. Though the research, like (Agrawal & Schorling,
1997; Bigus, 1996), have put the promotion effect on the
sales into consideration, yet it is still a straightforward
model. It is necessary to develop a more robust approach to
handle the promotion effect on the sales and then input it to
the ANN. The proposed system is discussed in more detail
in the following.
The proposed intelligent forecasting system consists of
(1) data collection, (2) special pattern model (FNN), and (3)
decision integration (ANN). Fig. 1 shows the proposed
system architecture. The system determines the qualitative
factors affecting the sales first. Thereafter, this effect is
integrated with time series data through a feedforward
neural network with error back-propagation (EBP) learning
algorithm. Each part is thoroughly discussed in the
following subsections.
3.1. Data collection
The current study requires two different kinds of data,
which include quantitative and qualitative data. The CVS
(convenience store) franchise company can provide the
daily sales data needed, while the promotion effect on sales
can be implemented by questionnaire. This study employs
the fuzzy questionnaire to obtain the fuzzy IF THEN rules
from the domain experts.
3.2. FNN architecture
This section discusses how to use FNN to effectively
handle the circumstance of promotion by means of FNN.
Since the FNN architecture is based on the fuzzy logic
which possesses both the precondition and consequence, the
precondition variables represent the effective factors while
the sales represents the consequence variable. First, the data
and IF THEN rules are obtained through the fuzzy Delphi
method. After this procedure, the collected data can be
applied to train the proposed FNN. The structure of FNN
presented in this study is similar to (Ishibuchi et al., 1995a).
The main difference is that the network employs the
asymmetric bell shaped instead of triangular fuzzy weights.
In addition, the network can eliminate the unimportant
weights during training. In the following, the two com-
ponents, fuzzy Delphi and FNN, are discussed in more
detail.
3.2.1. Fuzzy Delphi
Delphi method was first developed by Dalkey and
Helmer (1963) in RAND Corporation. This approach has
been widely applied in many management areas, e.g.
forecasting, public policy analysis, or project planning.
However, the conventional Delphi method cannot converge
very well. Besides, high survey frequencies always result in
high costs. Thus, Ishikawa, Amagasa, Tomiqawa, Tatsuta,
and Mieno (1993) utilized fuzzy sets theory in the Delphi
method to resolve the above shortcomings. However, the
method proposed by Ishikawa et al. (1993) is inappropriate
 R.J. Kuo et al. / Neural Networks 15 (2002) 909925 913

for this research. Therefore, the procedures of the modified
fuzzy Delphi method for this research are as follows:
a. Collect all the possible factors, which may affect the
sales, and make the sortation, grouping in order to
formulate the first questionnaire. The domain experts
select the important factors and give each a fuzzy
number.
b. Formulate the second questionnaire, which is a set of
IF THEN rules based on the three dimensions.
c. Fuzzify the returned second questionnaires from the
senior managers and determine the pessimistic index,
optimistic index and average index. The formulations
are as follows:
1. Pessimistic (minimum) index
l1 l2 ln
l 1
n
where li is the pessimistic index of the ith expert
and n is the number of the experts.
2. Optimistic (maximum) index
u u2 un
u 1 2
Xx
n
where ui is the optimistic index of the ith expert.
3. Average (most appropriate index)
For each interval li ; ui ; calculate the mid-
point, mi li ui =2 and then find
m m1 m2 mn 1=n 3 activation function of hidden units and output units of
Thereafter, the fuzzy number A m; s ; sL ; R
(1995). Thus, this component intends to modify Ishibuchis
work (1995a). In Ishibuchis work, the input, weight, and
output fuzzy numbers are symmetric triangular. Thus, this
paper replaces the triangular fuzzy numbers with asymmetric
Gaussian functions since it can speed up the convergence (Kuo
& Xue, 1999). The inputoutput relation of the proposed FNN
is discussed in the following. However, the operations offuzzy
numbers are presented first.
Operations of fuzzy numbers. Before describing the FNN
architecture, fuzzy numbers and fuzzy number operations
are defined by the extension principle. In the proposed
algorithm, real numbers and fuzzy numbers are denoted by
the lowercase letters (e.g. a,b,) and a bar placed over
uppercase letters (e.g. A;
B;

), respectively.
Since input vectors, connection weights and output
vectors of multi-layer feedforward neural networks are
fuzzified in the proposed FNN, the addition, multiplication
and non-linear mapping of fuzzy numbers are necessary for
defining the proposed FNN. Thus, they are defined as
follows:

Xx
Zz
Yy

max{Xx

^ Yylz

x y}; 6
Zz
Yy

max{Xx

^ Yylz

xy}; 7
f Netz max{Netxlz f x}; 8
p

where X;
Y;

Z;

and Net are fuzzy numbers, denotes
the membership function of each fuzzy number, ^ is the
minimum operator, and f x 1 exp2x 2 1 is the
the proposed FNN. The a-cut of fuzzy number X
is defined as

which represents the mean, right width, and left
a {xlXx

X
$ a; x [ R} for 0 , a # 1;
width, respectively, for an asymmetric bell shaped
a represents X
aL ; X

a X
aU  and X

aL and
where X
function, can be determined through the above U

a are the lower boundary and the upper boundary of the a-
X
indices:

a; respectively.
cut set X
l2m FNN learning algorithm. The proposed FNN learning
sR 4
3 algorithm is similar to EBP-type learning algorithm. Before
u 2 m discussing the algorithm, some assumptions should be
sL 5
clarified as follows:
3
The asymmetric bell shaped function is defined as
1. fuzzify a three layer feedforward neural network with nI
a bell shaped function with different left and right
input units, nH hidden units, and nO output units (i.e.
widths.
input vectors, target vectors connection weights and
d. Formulate the third questionnaire with the above
thresholds are fuzzified);
indices and repeat the survey.
2. the input vectors are non-negative fuzzy numbers whose
e. Employ dissemblance index rule (Kaufmann & Gupta,
lower and upper bounds are larger than zero;
1985) to examine the second and third questionnaire
3. these fuzzy numbers are asymmetric Gaussian shaped
fuzzy numbers. If all the fuzzy numbers have converged,
fuzzy numbers.
stop the survey; otherwise, go back to step d.
The input output relation of the proposed FNN is
3.2.2. FNN defined by the extension principle (Ishibuchi et al., 1995a)
Section 3.2.1 has determined the shape for each and can be written as follows:
membership function. However, most FNNs can only
handle the actually real input and output except Ishibuchi Input layer
et al. (1995a), Ishibuchi, Morioka, and Turksen (1995b),
Ishibuchi and Tanaka (1991), Lin (1995) and Lin and Lu
pi a X
pi a;
O i 1; 2; ; nI ; 9
914 R.J. Kuo et al. / Neural Networks 15 (2002) 909925

Hidden layer X
nO
Netpk aL
kh aL O
W
ph aL

ph a f Netph a;
O h 1; 2; ; nH ; 10 i1

kh aL $0
W
X
nI
Netph a W
pi a Q
h a;

hi aO 11 X
nO
i1 W
ph aU Q
k aL ;

kh aL O
k1

kh aL ,0
W
Output layer
X
nO

pk a f Netpk a;
O k 1; 2; ; nO ; 12 Netpk aU
kh aU O
W
ph aU
k1
X
nO
kh aU $0
W
Netpk a W
ph a Q
k a:

kh aO 13
k1 X
nO

kh aU O
W
ph aL
From Eqs. (11) (15), the a-cut sets of the fuzzy output O
pk k1

kh aU ,0
W
are calculated from the a-cut sets of the fuzzy inputs, fuzzy
weights, and fuzzy biases. If the a-cut set of the fuzzy Q
k aU ; 18
outputs O
pk is required, then the above relation can be
rewritten as follows:
The objective is to minimize the cost function defined as:
Input layer XX
nO   X
h i h i Ep L
a Ek U
a Eka Epa ; 19
O
pi a O
pi aL ; O

pi aU X
pi aL ; X
pi aU ; a k1 a
14
i 1; 2; ; nI ; where

Hidden layer X
nO  
L U
h i Epa a Ek a Eka ; 20

ph a O
O
ph aL ; O

ph aU k1

h  i 1 
2
f Netph aL ; f Netph aU ; 15 L
Ek a Tpk aL 2 O

pk aL ;
2
21
h 1; 2; ; nH ; U 1 
2
Ek a Tpk aU 2 O

pk aU ;
X
nI 2
Netph aL
hi aL O
W
pi aL L U
where Ek a and Eka can be viewed as the squared errors for
i1

hi aL $0
W the lower boundaries and the upper boundaries of the a-cut
sets of a fuzzy outputs and fuzzy targets. Other a-cut sets of
X
nI
a fuzzy weight are independently modified to reduce Epa :
W
pi aU Q
h aL ;

hi aL O
i1
Otherwise, the fuzzy numbers after modifications are

hi aL ,0
W distorted. Therefore, each fuzzy weight is updated in a
similar but still different way from the approach of Ishibuchi
X
nI
et al. (1995a). That is, in the proposed FNN, the membership
Netph aU
hi aU O
W
pi aU
i1 functions are asymmetric Gaussian functions (i.e. a general

hi aU $0
W shape), which are represented as:
X
nI 8  2 !

pi aL Q
h aU ;

hi aU O >
> 1 x 2 m
W > exp 2
> ; x,m
>
> 2 sL
i1

hi aU ,0
W
>
<


Ax 1; xm 22
16 >
> !
>
>  
Output layer >
> 1 x2m 2
h i > exp 2
: ; otherwise

pk a O
pk aL ; O

pk aU 2 sR
O
h    i Thus, the asymmetric Gaussian fuzzy weights are specified
f Netpk aL ; f Netpk aU ; 17
by their three parameters (i.e. center right width and left
width). The gradient search method is derived for each
k 1; 2; ; nO ; parameter. It is the amount of adjustment for each parameter
 R.J. Kuo et al. / Neural Networks 15 (2002) 909925 915

average membership function values curve from a 0 to 1.

Dash line, horizontal line as mx 1; x axis, and y axis
bound the measured area. Practically, a is set up to start
from 0.05 in that membership function values for a 0 are
positive and negative infinite. Yagers fuzzy number index,
F, is calculated as follows:
1 1 h i
F m sR 22ln a1=2 m 2 sL 22ln a1=2 da
0:05 2

1 1
F s 2 sL 22ln a1=2 da
m
0:05 2 R

 a1 1
 1
F ma sR 2 sL 22ln a1=2 da 25
 a 0:05 2 0:05

1 X
Fig. 2. Yagers area.
F 0:95m sR sL 22ln a1=2
2 a

using the cost function Epa as follows: F 0:95m 0:556516sR 2 sL

Epa The learning algorithm of fuzzy neural network with weight

Dmkh t 2h bDmkh t 2 1 23
mkh
Epa
DsLkh t 2h bDsLkh t 2 1;
sLkh
24
Epa
DsRkh t 2h bDsRkh t 2 1:
sRkh
Since the gradient search method is very easy to find the
local minimum, this research employs genetic algorithm to
provide the initial weights for the FNN which not only
decreases the training time but also prevents the local
minimum. For detailed discussion, refer to Kuo et al.
(2001).
3.2.3. FNN with weight elimination
In Section 3.2.2, all the weights are kept until the end of
the training. However, in the case of weights, which are
close to zero, it may be the source of bias. If these weights
can be deleted during training, the error may be reduced. For
real-value network, a threshold, which is close to zero, is
setup and the weights, which are smaller than the thresholds
are deleted. The way to determine the close-to-zero value is
trial and error. If the network is fuzzy instead of crisp, then
the fuzzy threshold value should be determined. One of the
fuzzy ranking methods should be chosen to determine
whether the weights should be deleted or not. In the present
study, the area measurement method proposed by Yager is
employed, though many other fuzzy ranking methods, like
degree of optimality, Hamming distance, a-cut, fuzzy mean
and standard deviation, and some other functions, scores or
indices, can be applied.
Yagers approach (1980) provides an index for compar-
ing the fuzzy numbers. The main concept for calculating the
area is to find out the average membership function values
from a 0 to 1. Fig. 2 shows the Yagers area for an
asymmetric Gaussian function. Dash line represents the
elimination is shown in Fig. 3a.
Besides the above weight elimination method, the other
approach is to add one more gene at the front of the
chromosome. It represents the status of the weight. Zero
implies that the weight can be eliminated, while the weight
should be kept, as it is equal to one. Fig. 4 shows the
structure of the chromosome and Fig. 3b shows the learning
procedure.
3.3. Decision integration
From the above part, FNN provides the qualitative effect
on sales. To yield the final result, the promotional effect is
integrated with time series data. This study employs a
feedforward neural network with EBP learning algorithm.
Since the result from FNN is a fuzzy number, the a-cut,
a 0:1; 0:3; 0:5; 0:7 and 0.9, is applied in order to get the
real numbers from the FNN. Thus, there are ten input nodes,
which represent the promotion effect.
For feedforward neural network with EBP learning
algorithm, the input neurons use y f x x (no change in
input) and all the other neurons generally have the sigmoidal
function y f x 1 exp2x21 : The objective is to
minimize cost function defined as:
1X
E T 2 Op 2 26
2 p p
where Tp and Op are the target and actual outputs,
respectively, and p is the number of training samples.
4. Simulation
Section 3 has shown the proposed fuzzy neural network
with weight elimination theoretically. In order to verify its
feasibility, this section employs four examples to simulate
916 R.J. Kuo et al. / Neural Networks 15 (2002) 909925

Fig. 3. (a) Training procedure for GA FNNW. (b) Training procedure for GAW FNN.

the FNN. It is written in C language being implemented in ship of fuzzy inputs and fuzzy outputs are shown in Fig. 5 as
IBM compatible PC. The simulation results can be a 0:1; 0:3; 0:5; 0:7; and 0.9, respectively. All the required
referenced for the real-world problem, which will be parameters are set up in the following:
presented in Section 5.
1. The number of hidden nodes: 3
4.1. Example one 2. The number of hidden layers: 2.
3. a-cut levels: a 0:1; 0:3; 0:5; 0:7; and 0.9.
The first example is a linear mapping. Three training 4. The number of training epochs: 30,000.

Tp;
samples, Xp;
where Xp
is the fuzzy input, Tp

is the 5. Training rate: h 0:3:
fuzzy desired output and training sample number p 6. Momentum: b 0:6:
1; 2; 3; are developed in the two-dimensional space. Each 7. Weight elimination: yes and No.
fuzzy number has mean as ym xm ; left width as yLs 2xLs ;
and right width as yRs 3xRs : The corresponding means and Fig. 6 shows the training results after training. Table 2
standard deviations are presented in Table 1. The relation- presents the MSE values for these two algorithms. The
testing sample results are shown in Fig. 7. It is obvious that
the proposed FNN can well learn the fuzzy relation between
fuzzy inputs and fuzzy outputs accurately. In addition, the
network with weight elimination is really better than the
network without weight elimination.

4.2. Example two

Example two simulates the non-linear relation of cosine

Tp
function. Six training pairs Xp;
where p 1; 2; ; 6; in
Fig. 4. The structure of chromosome. two-dimensional space are used. They are generated by
 R.J. Kuo et al. / Neural Networks 15 (2002) 909925 917

Table 1
Training pairs for example one

Sample number Input Output

Left s m Right s Left s m Right s

1 0.456 2 0.123 0.912 2 0.369

2 0.567 5 0.234 1.134 5 0.702
3 0.678 8 0.345 1.356 8 1.035

Table 2
Example ones MSE values Fig. 5. Example ones training pairs.

Weights elimination With (fuzzy ranking) With (GA) Without

MSE 0.000102 0.000117 0.000124

Improved Rate 17.74%

Table 3
Training pairs of example two

Sample Number Input Output

Left s m Right s Left s m Right s

1 0.05 22.94 0.05 0.05 20.2 0.05

2 0.05 22.62 0.05 0.05 20.5 0.05
3 0.05 22.12 0.05 0.05 20.85 0.05 Fig. 6. Example ones testing results for training pairs.
4 0.05 21.03 0.05 0.05 20.86 0.05
5 0.05 20.52 0.05 0.05 20.5 0.05
6 0.05 20.2 0.05 0.05 20.2 0.05

using the Gaussian functions presented in Table 3. The

mean value is as ym cosxm ;while the left width and right
width are as yLs xLs and yRs xRs ; respectively. The
graphical relation of fuzzy inputs and outputs as a is equal
to 0.1,0.3,0.5,0.7 and 0.9 for training pairs is shown in Fig.
8. All the required parameters setup is the same as example
one. In addition, the training data are linearly transformed in
order to fit the assumptions.
Fig. 9 shows the testing results for the training pairs,
while the computational results for new testing pairs are
shown in Fig. 10. The final MSE values for with and without Fig. 7. Example ones testing results for two new testing pairs.
weight elimination are 0.000054 and 0.000076, respectively
(Table 4). This, again, proves that weight elimination really
can improve the performance of FNN.

4.3. Example three

This example will try to learn fuzzy IF THEN rules with

two precondition variables (temperature X1 and humidity
X2) and one consequence variable (engine speed Y ) through
FNN. These rules are as shown in Table 5.
The Gaussian functions applied are presented in Table 6.
Totally, there are nine training pairs for FNN. In order to
determine the best network topology, different hidden node
numbers ranging from 3 to 6 are implemented. Similarly,
different training rates, 0.3 and 0.6, and different momentum Fig. 8. Example twos training pairs.
918 R.J. Kuo et al. / Neural Networks 15 (2002) 909925

Table 4
Example twos MSE values

Weights elimination With (fuzzy ranking) With (GA) Without

MSE 0.000054 0.000061 0.000076

Improved Rate 28.95%

terms, 0.3 and 0.6, are also tested. In addition, two different
fuzzy thresholds are testified (0.3, ^ 0.1, 0.3) and (0.5,
^ 0.3, 0.5). Totally, there are 48 different combinations. The
simulation results are shown in Table 7. The network with
weight elimination definitely can reduce the training error. Fig. 9. Example twos testing results for training pairs.
The decrease rate is 3.5%. Twelve out of thirteen cases show
better performance in the case that weights are really momentum have significant influence on training error
eliminated. compared with those with weight elimination, since their p-
The other goal of trained FNN is to infer two more values are 0.006 and 0.009, respectively. Besides, the
linguistic terms for each precondition variable with respect interaction of training rate and momentum is more
to existed three linguistic terms. Thus, totally there are 25 significant, while the interaction of training rate and weight
fuzzy IF THEN rules after inference. The new added fuzzy elimination and interaction of momentum and weight
rules are presented in Table 8. Besides, genetic algorithm is elimination are not significant as a 0:05: According to
also applied for increasing the accuracy. Table 9 indicates these results, weight elimination should be implemented
the computational results. It is very clear that GA FNNW after the training rate and momentum term have been well
can provide the best forecast. However, using GA to setup. This can result in the lowest training error.
eliminate the unimportant fuzzy weights can provide better
result, but not the best.
5. Model evaluation results
4.4. Example four
The above sections have presented the proposed fore-
The purpose of this example is to reconfirm the validity casting system and FNNs feasibility numerically. Further, a
of FNN with weight elimination both in speed and accuracy. real-world problem is applied to verify the proposed
The training pairs are adopted from example one. The initial systems practicality. In addition, the proposed system is
also compared with the other method, single ANN and
weights are generated randomly. The number of simulation
ARMA. Both the procedures and results are sequentially
is 30 for both cases using IBM compatible PC-166. All the
shown in the following subsections.
parameters setup is identical to example one. Table 10
shows the simulation results and t test values. Weight
elimination really reduces the training time and training 5.1. Data collection
error as a 0:01:
In order to further find out the procedure for weight A nationally well-known CVS franchise company
elimination, we conducted a three-factorial (training rate, provides the daily sales data. Since the forecasting pattern
momentum and weight elimination) design using example
three. There are two levels for each factor. Thus, totally
there are eight different combinations. The ANOVA results
are presented in Table 11. It indicates that training rate and

Table 5
Example threes fuzzy rules table for training

X1 X2

S MS M ML L

L S MS M
ML
M MS M ML
MS
S ML L L
Fig. 10. Example twos testing results for four new testing pairs.
 R.J. Kuo et al. / Neural Networks 15 (2002) 909925 919

Fig. 11. The time series data.
is divided into two categories, general pattern and special
pattern, the data collection is also comprised of two parts:
(1) Time series data. The company provides the daily
sales of 500 cm3 papaya milk. The total number of the data
points is 379 as shown in Fig. 11. The sudden increase of
sales indicates that the promotion is conducting. Totally
there are five times of promotion. The time period lasts from
1 January 1995 to 14 January 1996. For the purpose of
testing, these 379 data points are further divided into
training set and testing set. The front one has 334 data points
while the latter one having 45 data points.
(2) Expert questionnaire. To survey all the possible
factors of promotion and their effects on the sales, this study
employs fuzzy Delphi method. The questionnaires setup is
based on the companys practical requirements. Thus, some
factors are included. The procedures are based on the
modified fuzzy Delphi method.
A large number of factors can generally affect the sales.
However, a different product has different characteristics.
After discussing with the companys senior managers, all
the factors are divided into three dimensions. The first
dimension represents the methods of promotion, while the
types of advertising media are presented in the second
dimension. The third dimension represents the competitors
actions. Table 12 presents the fuzzy number of each event

Table 6
Training pairs of example three

Rule no. Input Output

X1 X2 Y

Left s m Right s Left s m Right s Left s m Right s

1 5 20 7 2 210 2.1 10 250 12

2 5 20 7 1.85 0 2.5 9 300 14
3 5 20 7 2.3 10 1.5 9 300 14
4 7 50 4 2 210 2.1 12 150 13
5 7 50 4 1.85 0 2.5 14 200 11
6 7 50 4 2.3 10 1.5 10 250 12
7 6 80 8 2 210 2.1 10 100 15
8 6 80 8 1.85 0 2.5 12 150 13
9 6 80 8 2.3 10 1.5 14 200 11

Table 7
Example threes MSE values for different topologies and setup

Hidden nodes h b Without (0.1, 0.3) Deleted no. Improved rate (%) (0.3, 0.5) Deleted no. Improved rate (%)

0.3 0.3 0.005319 0.005319 0 0.00 0.005133 3 3.50

3 0.3 0.6 0.005805 0.005510 3 5.09 0.005510 3 5.09
0.6 0.3 0.005929 0.005612 3 5.35 0.005612 3 5.35
0.6 0.6 0.006947 0.006947 0 0.00 0.006947 0 0.00
0.3 0.3 0.005233 0.005106 4 2.41 0.005088 4 2.77
4 0.3 0.6 0.005653 0.005436 4 3.83 0.005436 4 3.83
0.6 0.3 0.005763 0.005763 0 0.00 0.005534 4 3.97
0.6 0.6 0.006644 0.006644 0 0.00 0.006644 0 0.00
0.3 0.3 0.005199 0.005199 0 0.00 0.005295 5 21.85
5 0.3 0.6 0.005557 0.005557 0 0.00 0.005388 5 3.04
0.6 0.3 0.005657 0.005657 0 0.00 0.005482 5 3.09
0.6 0.6 0.006452 0.006452 0 0.00 0.006452 0 0.00
0.3 0.3 0.005236 0.005236 0 0.00 0.005236 0 0.00
6 0.3 0.6 0.005920 0.005920 0 0.00 0.005920 0 0.00
0.6 0.3 0.005666 0.005666 0 0.00 0.005666 0 0.00
0.6 0.6 0.006223 0.006223 0 0.00 0.006223 0 0.00
920 R.J. Kuo et al. / Neural Networks 15 (2002) 909925

Table 8 study. The reason is that genetic algorithm may prevent the
New fuzzy rule table of example three network getting stuck to the local minimum and accelerate
X1 X2 the training speed. In addition, different training rates and
momentum terms may yield different results. Thus, two
S MS M ML L training rates, 0.3 and 0.6, and two momentum terms, 0.3
and 0.6, are tested. Two different fuzzy threshold numbers
L S S MS M M
ML S MS M M ML
as used in example four will also be utilized. The network
M MS M M ML ML will not stop learning until 30,000 epochs. The a-level sets
MS M M ML L L are 0.1, 0.3, 0.5, 0.7, and 0.9. For the training results as
S ML ML L L L shown in Table 14, the cell with symbol p is the best result,
or best network. The lowest MSE value is 0.993 1023 as
training rate and momentum are 0.3 and 0.6, respectively.
after three times of survey. The reason for three times of
The network structure is 3 7 7 1. The weight
survey is that the similarity testing results indicate that all
elimination criterion is (0.5, ^ 0.3, 0.5). Besides, GAW
the fuzzy numbers have converged for the third survey.
FNN is also implemented for comparison. The best topology
Therefore, this knowledge base will be applied to train the
is 3 8 8 1 and its MSE is 1.021 1023 as training
FNN and represents the FNN outputs.
rate and momentum are 0.3 and 0.1, respectively. Finally,
Besides, one event, 3-dollar discount, is selected as the
both these two networks become integrated with time series
testing case. Thus, totally there are only 42 (3 7 2) IF-
THEN rules for training the FNN as shown in Table 13. data in the next part.

5.2. Special pattern model (FNN) 5.3. Decision integration model (ANN)

The initial weights for FNN are generated by using This subsection will demonstrate the integration of the
genetic algorithm proposed by Kuo et al. (2001) in this qualitative factor effect on sales and time series data. Both

Table 9
The results for different algorithms

Algorithms FNN FNNW GA FNN GAW FNN GA FNNW

Mean square error 0.005818 0.005767 0.000556 0.000526 0.00007975

FNN: FNN only and without weight-elimination; FNNW: FNN only and with weight-elimination; GA FNN: genetic algorithm to find the initial weights
and followed by FNN; GAW FNN: genetic algorithm with weight-elimination and followed by FNN; GA FNNW: genetic algorithm and followed by
FNN with weight-elimination.

Table 10
Example fours MSE values and t values

With/out weight elimination Mean Standard deviation Sample no. t value P-value Improved rate (%)

Error Without 0.000111 2.5 10205 30 3.392 0.0010 17.99

With 0.000091 2 10205 30
Time Without 336.86 0.52481 30 14.4 5 10215 0.62
With 334.77 0.59616 30

Table 11
Simulation ANOVA table

Source of deviation Degree of freedom Sum square Mean sum square F Value P Value

h 1 1.69533 10205 1.69533 10205 8.034 0.006

b 1 1.55113 10205 1.55113 10205 7.350 0.009
Cut 1 2.36135 10207 2.36135 10207 0.112 0.739
h*b 1 1.76375 10206 1.76375 10206 0.836 0.364
h pcut 1 9.39688 10209 9.39688 10209 0.004 0.947
b pcut 1 1.47744 10209 1.47744 10209 0.001 0.979
Combination error 57 0.000120287 2.1103 10206
Total 63 0.000154763
 R.J. Kuo et al. / Neural Networks 15 (2002) 909925 921

Table 12
The fuzzy number of each event for the third questionnaire

Factors Events Average (m ) sR l 2 m=3 sL u 2 m=3

Promotion methods 10 dollars discount 8.6000 0.2333 0.2000

5 dollars discount 4.9000 0.3000 0.2333
3 dollars discount 2.7000 0.1000 0.0667
Buy two get one free 6.8000 0.3000 0.2000
At night on TV 7.6000 0.3000 0.2667
At noon on TV 2.5000 0.3333 0.1667
Advertising media In the evening on TV 3.1000 0.4667 0.1333
Radio 4.5000 0.4000 0.2667
Newspaper 3.8000 0.5000 0.1667
POP notice 6.5000 0.4333 0.1000
Poster 6.6000 0.3000 0.2000
Competitors action Related products without promotion 7.6000 0.4000 0.2000
Related products with promotion 4.5000 0.3333 0.1000

the training and testing results are presented in the
following.
(1) Training. For the integration network with both the
qualitative and quantitative factors, eight different models
are testified in order to find out the best network topology.
Table 15 shows the four different kinds of network topology
(Models I VIII). Besides, Table 15 also presents the four
network topologies (Models IX XII) without qualitative
factors. In addition, conventional network with an
additional input unit for the promotion effect is also
considered. This input unit receives on off units (1:
promotion, 0: non-promotion). There are also four network
topologies (Models XIII XVI) for such setup. Training rate
and momentum are both 0.5. The network will not stop
training until the MSE no longer decreases over 500 epochs.
Four best networks for two integration networks, conven-
tional network, and conventional network with promotion
unit are models III, VIII, XII, and XVI, respectively. Model
III with network structure 25 28 1 has the MSE value
0.002151, while the MSE value for model IIIV with
structure 30 58 1 has the MSE value 0.002248. Model
XII with structure 20 34 1 is 0.002441, while model
XVI with network structure 21 36 1 has the MSE value
0.002397. Basically, the MSE values of networks with both
quantitative and qualitative factors are all smaller than those
of networks with only quantitative factors. Besides, the
former always has 10.05% less training epochs than the
latter.
In order to find out better results for these three models,
three training rates, 0.1, 0.3, 0.5, and three momentum
terms, 0.1, 0.5, 0.8, are tested. Totally there are nine
combinations for each model. The computational results are
shown in Table 16. Model III has lowest MSE value,
0.001837, as a and b are 0.1 and 0.5, respectively, while the
lowest MSE value for model VIII is 0.0020020 as a and b
are 0.1 and 0.5, respectively. Model XII has the lowest MSE
value 002282 as a and b are 0.3 and 0.5, respectively.
Model XVI has lowest MSE value, 0.002102 as a and b are
0.5 and 0.8, respectively.
(2) Testing. Though model III has been shown to be the
best network using training data, it cannot be guaranteed
that its testing results are also the best. The further
comparison is based on the 45 testing data points as
mentioned. There is one time of promotion, 3-dollar
discount, during the period and it has not been included in
the FNN knowledge base. Both the MSE and MAPE (mean
absolutely percentage error) values for testing set are listed
in Table 17. It is very clear that integration model still has
the best performance compared with both conventional
networks and ARMA (autoregressive and moving average)
model. The MSE value for integration model with GA
FNNW algorithm is 0.001753, while the integration model
with GAW FNN algorithm has the MSE value of
0.001856. The former is also outperforms the latter. The
coefficients of ARMA are determined after examining the
ACF (auto-correlation function) and PACF (partial auto-
correlation function). The actual and forecasting outputs are
shown in Fig. 12.

6. Discussion

Section 5 has presented evaluation results based on data

Fig. 12. The integration ANN forecasting result. accumulated from a CVS franchise company. The proposed
922 R.J. Kuo et al. / Neural Networks 15 (2002) 909925

Table 13
Fuzzy IFTHEN rules

Rule Fuzzy number

IF THEN

Promotion Media Competitor Left s m Right s

1 10 dollars discount At night on TV No 0.2000 7.8000 0.2667

2 10 dollars discount At noon on TV No 0.0333 2.1000 0.5667
3 10 dollars discount In the evening on TV No 0.1000 3.9000 0.4333
4 10 dollars discount Radio No 0.2000 4.6000 0.2667
5 10 dollars discount Newspaper No 0.2333 5.5000 0.3000
6 10 dollars discount POP notice No 0.2000 7.0000 0.3333
7 10 dollars discount Poster No 0.1000 6.5000 0.3000
8 5 dollars discount At night on TV No 0.2000 6.0000 0.4000
9 5 dollars discount At noon on TV No 0.0333 1.1000 0.3000
10 5 dollars discount In the evening on TV No 0.1000 3.3000 0.3667
11 5 dollars discount Radio No 0.1333 3.4000 0.3333
12 5 dollars discount Newspaper No 0.2000 4.2000 0.3333
13 5 dollars discount POP notice No 0.1333 5.0000 0.4000
14 5 dollars discount Poster No 0.1000 5.3000 0.3000
15 Buy two get one free At night on TV No 0.2333 7.3000 0.3000
16 Buy two get one free At noon on TV No 0.0000 3.2000 0.4667
17 Buy two get one free In the evening on TV No 0.0333 3.7000 0.4333
18 Buy two get one free Radio No 0.2000 5.2000 0.3333
19 Buy two get one free Newspaper No 0.2000 5.4000 0.3333
20 Buy two get one free POP notice No 0.2333 6.5000 0.3000
21 Buy two get one free Poster No 0.2000 6.6000 0.2667
22 10 dollars discount At night on TV Yes 0.2333 7.7000 0.3000
23 10 dollars discount At noon on TV Yes 0.1000 3.7000 0.3667
24 10 dollars discount In the evening on TV Yes 0.1000 4.1000 0.4333
25 10 dollars discount Radio Yes 0.2000 4.8000 0.2667
26 10 dollars discount Newspaper Yes 0.2333 5.7000 0.3000
27 10 dollars discount POP notice Yes 0.2333 6.1000 0.3667
28 10 dollars discount Poster Yes 0.2000 7.1000 0.2333
29 5 dollars discount At night on TV Yes 0.2000 5.8000 0.4000
30 5 dollars discount At noon on TV Yes 0.0000 2.4000 0.4000
31 5 dollars discount In the evening on TV Yes 0.0333 2.1000 0.4333
32 5 dollars discount Radio Yes 0.1333 3.4000 0.3333
33 5 dollars discount Newspaper Yes 0.1333 4.4000 0.4000
34 5 dollars discount POP notice Yes 0.1000 4.7000 0.3667
35 5 dollars discount Poster Yes 0.1667 6.0000 0.3333
36 Buy two get one free At night on TV Yes 0.2000 6.8000 0.2667
37 Buy two get one free At noon on TV Yes 0.1000 3.5000 0.3667
38 Buy two get one free In the evening on TV Yes 0.1000 3.5000 0.3667
39 Buy two get one free Radio Yes 0.1000 4.6000 0.4000
40 Buy two get one free Newspaper Yes 0.1000 4.5000 0.3667
41 Buy two get one free POP notice Yes 0.2000 6.2000 0.2667
42 Buy two get one free Poster Yes 0.2000 7.1000 0.2333

scheme utilizes two kinds of information (i.e. fuzzy if then
rules and numerical time series data) in the learning of
neural networks. The factor effects on the sales seem to be
subjective since the data are provided by either the senior
managers or experts. However, the number of experts is 20,
implying that the subjective factors can be reduced. In
particularly the fuzzy Delphi method is employed; the
above consideration can also be ignored.
Table 17 indicates that integration model outperforms all
other forecasting methods, e.g. ARMA (2,5) and conven-
tional ANN. The reason is that the integration ANN
prioritizes the promotion effect on the sales pattern. Even
with the forecasting result, the integration ANN is also
second to none. Regarding the ARMA model and ANN
model, the results are dependent. Basically, if the ANN can
be well set up, it can provide the better result.
The proposed FNN is able to learn the relationships
between fuzzy inputs and outputs. If pruning technique
is included in the training, it provides more promising
results. However, the simulation results according to
example four indicate that the training rate and
momentum should be well set up before including the
weight elimination. Also, GA FNNW can provide the
best performance.
 R.J. Kuo et al. / Neural Networks 15 (2002) 909925 923

Table 14
Training results of FNN

Network structure Parameter Weight-elimination criteria

h b m 0:1; s 0:3 m 0:3; s 0:5

3-3-3-1 0.3 0.6 0.002994 0.002950 0.002971 0.002994 0.002950 0.002971

0.6 0.3 0.002546 0.002541 0.002542 0.002546 0.002167 0.002589
3-4-4-1 0.3 0.6 0.002035 0.002030 0.002034 0.002035 0.001742 0.002034
0.6 0.3 0.002082 0.002079 0.002082 0.002082 0.002079 0.002082
3-5-5-1 0.3 0.6 0.001536 0.001545 0.001536 0.001717 0.001652 0.001674
0.6 0.3 0.001646 0.001646 0.001645 0.001756 0.001686 0.001794
3-6-6-1 0.3 0.6 0.001706 0.001691 0.001718 0.001681 0.001686 0.001741
0.6 0.3 0.002622 0.002591 0.002597 0.002056 0.001946 0.002060
p
3-7-7-1 0.3 0.6 0.001013 0.001269 0.001108 0.001013 0.000993 0.001040
0.6 0.3 0.001346 0.001349 0.001345 0.001414 0.001349 0.001345
3-8-8-1 0.3 0.6 0.001113 0.001097 0.001110 0.001249 0.001250 0.001276
0.6 0.3 0.001350 0.001393 0.001355 0.001471 0.001500 0.001494

Table 15
Different neural network model

Network number Time series Qualitative factor a-cut Promotion unit Input nodes Hidden nodes

Integration network (GA FNNW) I 5 10 0 15 8 30

II 10 10 0 20 11 40
III 15 10 0 25 13 50
IV 20 10 0 30 15 60
Integration network (GAW FNN) V 5 10 0 15 8 30
VI 10 10 0 20 11 40
VII 15 10 0 25 13 50
VIII 20 10 0 30 15 60
Conventional network IX 5 0 0 5 3 12
X 10 0 0 10 6 22
XI 15 0 0 15 8 30
XII 20 0 0 20 11 40
Conventional network with promotion unit XIII 5 0 1 6 3 14
XIIII 10 0 1 11 6 24
XV 15 0 1 16 8 32
XVI 20 0 1 21 11 42

Table 16
MSE values of network III for different setup

h III VIII XI XVI

b 0.1 0.3 0.5 0.1 0.3 0.5 0.1 0.3 0.5

0.1 0.001943 0.002315 0.002067 0.002054 0.002398 0.002284 0.002708 0.002349 0.002350 0.002683 0.002293 0.002302
0.5 0.001837 0.002077 0.002151 0.002002 0.002211 0.002309 0.002454 0.002282 0.002441 0.002377 0.002254 0.002397
0.8 0.002389 0.002210 0.002332 0.002477 0.002428 0.002457 0.002793 0.002697 0.002712 0.002636 0.002598 0.002102

7. Conclusions improvement. Integrating the time series data with the

This study has developed an intelligent forecasting
system based on FNN to solve the sales forecasting problem
under promotion. Though directly using a single ANN to
model the sales pattern has been shown to be better than the
conventional statistical methods, it still need further
qualitative factor effect from FNN can provide more reliable
forecast. Besides, the FNN with weight elimination really
can improve FNNs performance. In the future, the authors
would like to further improve the capability of FNN. One
direction is to apply floating genetic algorithm to find out
the solution for FNN, while the other is to include more
924 R.J. Kuo et al. / Neural Networks 15 (2002) 909925
Table 17
Comparison of integration and conventional networks
Models MSE MAPE (%)
Integration with GA FNNW 0.001753 7.689
Integration with GAW FNN 0.001856 8.388
Conventional 0.002359 14.929
Conventional with promotion unit 0.002173 11.237
ARMA (2,5) 0.005356 20.323
qualitative factors, which may yield a more precise result. In
addition, this proposed system structure can also be used for
other applications.
Acknowledgments
The authors would like to thank the National Science
Council, Republic of China for partially supporting this
manuscript under Contract No. NSC 89-2213-H-027. Mr
L.C. Shie, who is the manager of the company providing the
data, is also appreciated for providing the daily sales data
and his valuable discussion regarding chain store
promotion.
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R.J. Kuo received the MS degree in Industrial and Manufacturing
Systems Engineering from Iowa State University, Ames, IA, in 1990 and
the PhD degree in Industrial and Management Systems Engineering from
the Pennsylvania State University, University Park, PA in 1994.
Currently, he is the Professor and Chairman in the Department of
Industrial Engineering, National Taipei University of Technology,
Taiwan, ROC. His research interests include architecture issues of neural
networks, fuzzy logic, and genetic algorithms, and their applications in
decision support systems, process control and forecasting.
P. Wu received the MS degree in Industrial and Manufacturing
Systems Engineering from Iowa State University, Ames, IA, in 1992
and the PhD degree in Industrial Engineering from North Carolina State
University in 1997. Currently, he is an associate professor in the
Department of Industrial Engineering and Management, I-Shou
University, Taiwan, ROC. His research focuses on fuzzy logic, neural
networks, decision support systems, and operations research.
C.P. Wang received the MS degree in management science from the I-
Shou University, Taiwan, in 1999. Currently, he is in the military
service. His research interests include neural networks, fuzzy logic, and
their applications in logistics and forecasting.