The Accuracy of Non-traditional versus Traditional Methods of Forecasting Lumpy Demand
Article first published online: 7 AUG 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Journal of Forecasting
Volume 31, Issue 8, pages 721–735, December 2012
How to Cite
Mukhopadhyay, S., Solis, A. O. and Gutierrez, R. S. (2012), The Accuracy of Non-traditional versus Traditional Methods of Forecasting Lumpy Demand. J. Forecast., 31: 721–735. doi: 10.1002/for.1242
- Issue published online: 18 OCT 2012
- Article first published online: 7 AUG 2011
- weighted moving average;
- exponential smoothing;
- Croston's method;
- Syntetos–Boylan approximation;
- neural networks
Forecasting for inventory items with lumpy demand is difficult because of infrequent nonzero demands with high variability. This article developed two methods to forecast lumpy demand: an optimally weighted moving average method and an intelligent pattern-seeking method. We compare them with a number of well-referenced methods typically applied over the last 30 years in forecasting intermittent or lumpy demand. The comparison is conducted over about 200,000 forecasts (using 1-day-ahead and 5-day-ahead review periods) for 24 series of actual product demands across four different error measures. One of the most important findings of our study is that the two non-traditional methods perform better overall than the traditional methods. We summarize results and discuss managerial implications. Copyright © 2011 John Wiley & Sons, Ltd.