Get access

The Accuracy of Non-traditional versus Traditional Methods of Forecasting Lumpy Demand

Authors


Somnath Mukhopadhyay, Department of Information and Decision Sciences, University of Texas at El Paso, TX, USA. E-mail: smukhopadhyay@utep.edu

ABSTRACT

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.

Ancillary