On the variance of intermittent demand estimates
Syntetos, A and Boylan, JE 2010, 'On the variance of intermittent demand estimates' , International Journal of Production Economics, 128 (2) , pp. 546-555.
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Intermittent demand occurs at random with many time periods showing no demand at all. Forecasting such demand patterns constitutes a challenging exercise because of the associated dual source of variation (demand intervals and demand sizes). Research in this area has developed rapidly in recent years with new results implemented into supply chain software solutions because of its practical implications. In an inventory context, both the accuracy of the forecasts and their variability (sampling error of the mean) have equal importance in terms of service level achievement and/or inventory cost minimisation. Although the former issue has been studied extensively (mainly building upon Croston’s model, 1972) the latter has been largely ignored. The purpose of this paper is to analyse the most well cited intermittent demand estimation procedures in terms of the variance of their estimates. Detailed derivations are offered along with a discussion of the underlying assumptions. As such, we hope that our contribution may constitute a point of reference for further analytical work in this area as well as facilitate a better understanding of issues related to modelling intermittent demands.
|Uncontrolled Keywords:||Intermittent demand, forecasting, supply chain management, inventory management|
|Themes:||Subjects outside of the University Themes|
|Schools:||Colleges and Schools > College of Business & Law > Salford Business School > Operations and Global Logistics Management|
|Journal or Publication Title:||International Journal of Production Economics|
|Funders:||EPSRC: EP/D062942/1, EPSRC: EP/G006075/1|
|Depositing User:||Professor Aris Syntetos|
|Date Deposited:||14 Oct 2011 09:28|
|Last Modified:||13 Mar 2013 11:31|
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