Forecasting the Intermittent Demand for Slow-Moving Items

Organizations with large-scale inventory systems typically have a large proportion of items for which demand is intermittent and low volume. We examine different approaches to forecasting for such products, paying particular attention to the need for inventory planning over a multi-period lead-time when the underlying process may be non-stationary. We develop a forecasting framework based upon the zero-inflated Poisson distribution (ZIP), which enables the explicit evaluation of the multi-period lead-time demand distribution in special cases and an effective simulation scheme more generally. We also develop performance measures related to the entire predictive distribution, rather than focusing exclusively upon point predictions. The ZIP model is compared to a number of existing methods using data on the monthly demand for 1,046 automobile parts, provided by a US automobile manufacturer. We conclude that the ZIP scheme compares favorably to other approaches, including variations of Croston's method as well as providing a straightforward basis for inventory planning.Croston's method; Exponential smoothing; Intermittent demand; Inventory control; Prediction likelihood; State space models; Zero-inflated Poisson distribution

Forecasting Sales of Slow and Fast Moving Inventories.

Adaptations of simple exponential smoothing are presented that aim to unify the task of forecasting demand for both slow and fast moving inventories. A feature of the adaptations is that they are designed to ensure that the resulting prediction distributions have only a nonnegative domain. A parametric bootstrap approach is proposed for generating empirical approximations for the so-called lead-time demand distribution, something required for inventory control calculations. The proposed methods are illustrated and their performance compared on real demand data for car parts.demand forecasting, inventory control, simulation, parametric bootstrapping, time series analysis.

Intermittent Prediction Method Based On Marcov Method And Grey Prediction Method

This paper concentrates on the intermittent demand for electric power supply and studies the method of demand prediction. This chapter first divides the demand for electric power supply into two statistical sequences: (1) sequence of demand occurrence, among which “1”stands for the occurrence of demand,“0”means that the demand fails to occur; (2) sequence of demand quantity. Next the author predicts the moment of time and the number of times n that demand occurs within a specific time interval in the future based on 0-1 sequence using Markov arrival process (MAP). Then the paper forecasts the demand quantity in subsequent n intervals using Grey prediction model GM (1, 1) based on the sequence of demand quantity. Finally, the author places the demand quantity in the n intervals in order at the moments where demand occurs to get the predicted result of demand for electric material with intermittent demand. According to instance analysis, the integrated approach mentioned in this paper surpasses existing methods in providing accurate prediction on data of product with intermittent demand

Stochastic models underlying Croston's method for intermittent demand forecasting

Intermittent demand commonly occurs with inventory data, with many time periods having no demand and small demand in the other periods. Croston's method is a widely used procedure for intermittent demand forecasting. However, it is an ad hoc method with no properly formulated underlying stochastic model. In this paper, we explore possible models underlying Croston's method and three related methods, and we show that any underlying model will be inconsistent with the properties of intermittent demand data. However, we find that the point forecasts and prediction intervals based on such underlying models may still be useful.Croston's method, exponential smoothing, forecasting, intermittent demand.

A Comparison of Methods for Forecasting Demand for Slow Moving Car Parts

This paper has a focus on non-stationary time series formed from small non-negative integer values which may contain many zeros and may be over-dispersed. It describes a study undertaken to compare various suitable adaptations of the simple exponential smoothing method of forecasting on a database of demand series for slow moving car parts. The methods considered include simple exponential smoothing with Poisson measurements, a finite sample version of simple exponential smoothing with negative binomial measurements, and the Croston method of forecasting. In the case of the Croston method, a maximum likelihood approach to estimating key quantities, such as the smoothing parameter, is proposed for the first time. The results from the study indicate that the Croston method does not forecast, on average, as well as the other two methods. It is also confirmed that a common fixed smoothing constant across all the car parts works better than maximum likelihood approaches.Count time series; forecasting; exponential smoothing; Poisson distribution; negative binomial distribution; Croston method.