DEMAND CATEGORISATION, FORECASTING, AND INVENTORY CONTROL FOR INTERMITTENT DEMAND ITEMS

• Main Authors: E. Babiloni, M. Cardós, J. M. Albarracín, M.E. Palmer
• Format: Article
• Language: English
• Published: Stellenbosch University 2012-01-01
• Series: South African Journal of Industrial Engineering
• Subjects: Croston’s method; categorisation of the demand pattern; stock control methods
• Online Access: http://sajie.journals.ac.za/pub/article/view/54

<p>ENGLISH ABSTRACT: It is commonly assumed that intermittent demand appears randomly, with many periods without demand; but that when it does appear, it tends to be higher than unit size. Basic and well-known forecasting techniques and stock policies perform very poorly with intermittent demand, making new approaches necessary. To select the appropriate inventory management policy, it is important to understand the demand pattern for the items, especially when demand is intermittent. The use of a forecasting method designed for an intermittent demand pattern, such as Croston’s method, is required instead of a simpler and more common approach such as exponential smoothing. The starting point is to establish taxonomic rules to select efficiently the most appropriate forecasting and stock control policy to cope with thousands of items found in real environments. This paper contributes to the state of the art in: (i) categorisation of the demand pattern; (ii) methods to forecast intermittent demand; and (iii) stock control methods for items with intermittent demand patterns. The paper first presents a structured literature review to introduce managers to the theoretical research about how to deal with intermittent demand items in both forecasting and stock control methods, and then it points out some research gaps for future development for the three topics.</p><p>AFRIKAANSE OPSOMMING: Daar word algemeen aanvaar dat intermitterende vraag op toevalswyse voorkom, met verskeie periodes waar daar geen vraag is nie. Wanneer die vraag dan wel materialiseer, oorskry dit dikwels die eenheidsgrootte. Die bekende vooruitskattingstegnieke en voorraadbeleidstellings het min sukses waar intermitterende vraag voorkom, sodat nuwe benaderings nodig is om die problem aan te spreek. Om ‘n geskikte voorraadbestuur-beleid te selekteer, is dit noodsaaklik om die vraagpatroon van die items te verstaan, juis in gevalle van intermitterende patrone. Die gebruik van ‘n vooruitskattingstegniek soos dié van Croston, eerder as die makliker en meer algemene benadering van eksponensiële effening, word aanbeveel. Die vertrekpunt is om taksonomiese reëls vas te stel om die mees gepaste vooruitskattingstegniek en voorraadbeheerbeleid te selekteer sodat die duisende items wat in werklike omgewings aangetref word, hanteer kan word. Hierdie artikel dra by in soverre as dat 1) vraagpatrone gekategoriseer word; ii) metodes vir vooruitskatting van intermitterende vraagpatrone voorgehou word; en iii) voorraadbeheermetodes voorgestel word vir items met wisselende vraag.</p>