Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Empirical heuristics for improving intermittent demand forecasting
AU - Petropoulos, Fotios
AU - Nikolopoulos, Konstantinos
AU - Spithourakis, Giorgos
AU - Assimakopoulos, Vassilios
PY - 2013
Y1 - 2013
N2 - Purpose: Intermittent demand appears sporadically, with some time periods not even displaying any demand at all. Even so, such patterns constitute considerable proportions of the total stock in many industrial settings. Forecasting intermittent demand is a rather difficult task but of critical importance for corresponding cost savings. The current study examines the empirical outcomes of three heuristics towards the modification of established intermittent demand forecasting approaches. Design/methodology/approach: First, optimization of the smoothing parameter used in Croston’s approach is empirically explored, in contrast to the use of an a priori fixed value as in earlier studies. Furthermore, the effect of integer rounding of the resulting forecasts is considered. Lastly, we evaluate the performance of Theta model as an alternative of SES estimator for extrapolating demand sizes and/or intervals. The proposed heuristics are implemented into forecasting support system.Findings: The experiment is performed on 3,000 real intermittent demand series from the automotive industry, while evaluation is made both in terms of bias and accuracy. Results indicate increased forecasting performance.Originality/Value: The current research explores some very simple heuristics which have a positive impact on the accuracy of intermittent demand forecasting approaches. While, some of these issues have been partially explored in the past, the current research focuses on a complete in-depth analysis of easy to employ modifications to well established intermittent demand approaches. By this, we enable the application of such heuristics on an industrial environment, which may lead into significant inventory and production cost reductions and other benefits.
AB - Purpose: Intermittent demand appears sporadically, with some time periods not even displaying any demand at all. Even so, such patterns constitute considerable proportions of the total stock in many industrial settings. Forecasting intermittent demand is a rather difficult task but of critical importance for corresponding cost savings. The current study examines the empirical outcomes of three heuristics towards the modification of established intermittent demand forecasting approaches. Design/methodology/approach: First, optimization of the smoothing parameter used in Croston’s approach is empirically explored, in contrast to the use of an a priori fixed value as in earlier studies. Furthermore, the effect of integer rounding of the resulting forecasts is considered. Lastly, we evaluate the performance of Theta model as an alternative of SES estimator for extrapolating demand sizes and/or intervals. The proposed heuristics are implemented into forecasting support system.Findings: The experiment is performed on 3,000 real intermittent demand series from the automotive industry, while evaluation is made both in terms of bias and accuracy. Results indicate increased forecasting performance.Originality/Value: The current research explores some very simple heuristics which have a positive impact on the accuracy of intermittent demand forecasting approaches. While, some of these issues have been partially explored in the past, the current research focuses on a complete in-depth analysis of easy to employ modifications to well established intermittent demand approaches. By this, we enable the application of such heuristics on an industrial environment, which may lead into significant inventory and production cost reductions and other benefits.
KW - intermittent demand
KW - smoothing parameters
KW - rounding
KW - theta method
KW - empirical investigation
KW - demand
KW - demand forecasting
KW - Empirical Investigation
U2 - 10.1108/02635571311324142
DO - 10.1108/02635571311324142
M3 - Journal article
VL - 113
SP - 683
EP - 696
JO - Industrial Management and Data Systems
JF - Industrial Management and Data Systems
SN - 0263-5577
IS - 5
ER -