Article ID: | iaor20081028 |
Country: | United Kingdom |
Volume: | 24 |
Issue: | 6 |
Start Page Number: | 389 |
End Page Number: | 402 |
Publication Date: | Sep 2005 |
Journal: | International Journal of Forecasting |
Authors: | Hyndman Rob J., Shenstone Lydia |
Keywords: | inventory |
Croston's method is widely used to predict inventory demand when it is intermittent. However, it is an ad hoc method with no properly formulated underlying stochastic model. In this paper, we explore possible models underlying Croston's method and three related methods, and we show that any underlying model will be inconsistent with the properties of intermittent demand data. However, we find that the point forecasts and prediction intervals based on such underlying models may still be useful.