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 - On the bias of intermittent demand estimates
AU - Syntetos, A. A.
AU - Boylan, John
PY - 2001/5/1
Y1 - 2001/5/1
N2 - Forecasting and inventory control for intermittent demand items has been a major problem in the manufacturing and supply environment. Croston (Operational Research Quarterly 23 (1972) 289), proposed a method according to which intermittent demand estimates can be built from constituent events. Croston's method has been reported to be a robust method but has shown more modest benefits in forecasting accuracy than expected. In this research, one of the causes of this unexpected performance has been identified, as a first step towards improving Croston's method. Certain limitations are identified in Croston's approach and a correction in his derivation of the expected estimate of demand per time period is presented. In addition, a modification to his method that gives approximately unbiased demand per period estimates is introduced. All the conclusions are confirmed by means of an extended simulation experiment where Croston's and Revised Croston's methods are compared. The forecasting accuracy comparison corresponds to a situation of an inventory control system employing a re-order interval or product group review.
AB - Forecasting and inventory control for intermittent demand items has been a major problem in the manufacturing and supply environment. Croston (Operational Research Quarterly 23 (1972) 289), proposed a method according to which intermittent demand estimates can be built from constituent events. Croston's method has been reported to be a robust method but has shown more modest benefits in forecasting accuracy than expected. In this research, one of the causes of this unexpected performance has been identified, as a first step towards improving Croston's method. Certain limitations are identified in Croston's approach and a correction in his derivation of the expected estimate of demand per time period is presented. In addition, a modification to his method that gives approximately unbiased demand per period estimates is introduced. All the conclusions are confirmed by means of an extended simulation experiment where Croston's and Revised Croston's methods are compared. The forecasting accuracy comparison corresponds to a situation of an inventory control system employing a re-order interval or product group review.
KW - Forecasting
KW - Inventory
KW - Intermittent demand
U2 - 10.1016/S0925-5273(00)00143-2
DO - 10.1016/S0925-5273(00)00143-2
M3 - Journal article
VL - 71
SP - 457
EP - 466
JO - International Journal of Production Economics
JF - International Journal of Production Economics
SN - 0925-5273
IS - 1-3
ER -