A Bayesian approach to forecast intermittent demand for seasonal products
by Mohammad Anwar Rahman; Bhaba R. Sarker
International Journal of Industrial and Systems Engineering (IJISE), Vol. 11, No. 1/2, 2012

Abstract: This paper investigates the forecasting of a large fluctuating seasonal demand prior to peak sale season using a practical time series, collected from the US Census Bureau. Due to the extreme natural events (e.g. excessive snow fall and calamities), sales may not occur, inventory may not replenish and demand may set off unrecorded during the peak sale season. This characterises a seasonal time series to an intermittent category. A seasonal autoregressive integrated moving average (SARIMA), a multiplicative exponential smoothing (M-ES) and an effective modelling approach using Bayesian computational process are analysed in the context of seasonal and intermittent forecast. Several forecast error indicators and a cost factor are used to compare the models. In cost factor analysis, cost is measured optimally using dynamic programming model under periodic review policy. Experimental results demonstrate that Bayesian model performance is much superior to SARIMA and M-ES models, and efficient to forecast seasonal and intermittent demand.

Online publication date: Tue, 17-Apr-2012

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