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The accuracy of intermittent demand estimates

Syntetos, Argyrios and Boylan, John E. 2005. The accuracy of intermittent demand estimates. International Journal of Forecasting 21 (2) , pp. 303-314. 10.1016/j.ijforecast.2004.10.001

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Abstract

Intermittent demand appears sporadically, with some time periods showing no demand at all. In this paper, four forecasting methods, Simple Moving Average (SMA, 13 periods), Single Exponential Smoothing (SES), Croston's method, and a new method (based on Croston's approach) recently developed by the authors, are compared on 3000 real intermittent demand data series from the automotive industry. The mean signed and relative geometric root-mean-square errors are shown to meet the theoretical and practical requirements of intermittent demand, as do the Percentage Better and Percentage Best summary statistics based on these measures. These measures are subsequently applied in a simulation experiment. The out-of-sample comparison results indicate superior performance of the new method. In addition, the results show that the mean signed error is not strongly scale dependent and the relative geometric root-mean-square error is a well-behaved accuracy measure for intermittent demand.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Uncontrolled Keywords: Demand forecasting; Intermittent demand; Accuracy measures; Croston's method; Exponential smoothing; Forecasting competition
Publisher: Elsevier
ISSN: 0169-2070
Last Modified: 04 Jun 2017 06:51
URI: http://orca.cf.ac.uk/id/eprint/65452

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