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Parameter optimization of intermittent demand forecasting by using spreadsheet

Gamze Ogcu Kaya (Department of Industrial Engineering, Fatih University, Istanbul, Turkey AND Department of Industrial Engineering, Bursa Orhangazi University, Bursa, Turkey)
Omer Fahrettin Demirel (Department of Industrial Engineering, Istanbul Technical University, Istanbul, Turkey)

Kybernetes

ISSN: 0368-492X

Article publication date: 7 April 2015

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719

Abstract

Purpose

Accurate forecasting of intermittent demand is very important since parts with intermittent demand characteristics are very common. The purpose of this paper is to bring an easier way of handling the hard work of intermittent demand forecasting by using commonly used Excel spreadsheet and also performing parameter optimization.

Design/methodology/approach

Smoothing parameters of the forecasting methods are optimized dynamically by Excel Solver in order to achieve the best performance. Application is done on real data of Turkish Airlines’ spare parts comprising 262 weekly periods from January 2009 to December 2013. The data set are composed of 500 stock-keeping units, so there are 131,000 data points in total.

Findings

From the results of implementation, it is shown that using the optimum parameter values yields better performance for each of the methods.

Research limitations/implications

Although it is an intensive study, this research has some limitations. Since only real data are considered, this research is limited to the aviation industry.

Practical implications

This study guides market players by explaining the features of intermittent demand. With the help of the study, decision makers dealing with intermittent demand are capable of applying specialized intermittent demand forecasting methods.

Originality/value

The study brings simplicity to intermittent demand forecasting work by using commonly used spreadsheet software. The study is valuable for giving insights to market players dealing with items having intermittent demand characteristics, and it is one of the first study which is optimizing the smoothing parameters of the forecasting methods by using spreadsheet in the area of intermittent demand forecasting.

Keywords

Citation

Ogcu Kaya, G. and Demirel, O.F. (2015), "Parameter optimization of intermittent demand forecasting by using spreadsheet", Kybernetes, Vol. 44 No. 4, pp. 576-587. https://doi.org/10.1108/K-03-2015-0062

Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited