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Effects Of Correlation On Intermittent Demand Forecasting And Stock Control, Nezih Altay, Lewis A. Litteral, Frank Rudisill
Effects Of Correlation On Intermittent Demand Forecasting And Stock Control, Nezih Altay, Lewis A. Litteral, Frank Rudisill
Nezih Altay
This study investigates the effects of three different types of correlation on forecasting and stock control of intermittent demand items. Applying appropriate forecasting and stock control methods to theoretically generated compound Poisson demand data we show that correlation in intermittent demand does play a role in forecast quality and stock control performance. Negative autocorrelation levels lead to higher service levels than positive values, while cost does not significantly change. Our results also show that high intermittency levels intensify these changes in service level. We also show that cross-correlation produces results in the opposite direction of autocorrelation in size or intervals; …
Adapting Wright’S Modification Of Holt’S Method To Forecasting Intermittent Demand, Nezih Altay, Frank Rudisill, Lewis A. Litteral
Adapting Wright’S Modification Of Holt’S Method To Forecasting Intermittent Demand, Nezih Altay, Frank Rudisill, Lewis A. Litteral
Nezih Altay
The challenge of accurately forecasting demand for spare parts is due to the intermittent nature of their demand. This study compares a recent modification of Croston’s method and a method based on Holt’s double exponential smoothing taking the firm’s competitive priorities into consideration. Wright’s modification of Holt’s method is presented as a viable alternative when forecasting demand for spares especially when trend is present. Results indicate that firms focusing on minimizing inventory levels as a priority should consider forecasting using the Modified Croston’s method. If their priority is high customer service, then the modified Holt’s method is superior.