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On the interaction between forecasting and stock control: The case of non-stationary demand

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  • Strijbosch, Leo W.G.
  • Syntetos, Aris A.
  • Boylan, John E.
  • Janssen, Elleke

Abstract

The effect of using estimated (forecast) demand parameters on the performance of an inventory control system is an intriguing and important subject. Recent research has been undertaken on this phenomenon assuming stationary demand data. In this paper we extend the research to non-stationary demands, by means of simulation. The case of a periodic order-up-to-level inventory system is considered and the experimental structure allows us to evaluate in a progressive manner the accumulated effect of using the optimal forecasting method, optimal forecast parameters and correct variance expression procedures. The results allow insights to be gained into operational issues and demonstrate the scope for improving stock control systems.

Suggested Citation

  • Strijbosch, Leo W.G. & Syntetos, Aris A. & Boylan, John E. & Janssen, Elleke, 2011. "On the interaction between forecasting and stock control: The case of non-stationary demand," International Journal of Production Economics, Elsevier, vol. 133(1), pages 470-480, September.
    • Handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:470-480
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    References listed on IDEAS

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    3. Kourentzes, Nikolaos, 2013. "Intermittent demand forecasts with neural networks," International Journal of Production Economics, Elsevier, vol. 143(1), pages 198-206.
    4. Ma, Xiyuan & Rossi, Roberto & Archibald, Thomas Welsh, 2022. "Approximations for non-stationary stochastic lot-sizing under (s,Q)-type policy," European Journal of Operational Research, Elsevier, vol. 298(2), pages 573-584.
    5. Janssen, E., 2010. "Inventory control in case of unknown demand and control parameters," Other publications TiSEM 9ba3c7c9-213b-47aa-9449-e, Tilburg University, School of Economics and Management.
    6. Petropoulos, Fotios & Wang, Xun & Disney, Stephen M., 2019. "The inventory performance of forecasting methods: Evidence from the M3 competition data," International Journal of Forecasting, Elsevier, vol. 35(1), pages 251-265.
    7. Ferbar Tratar, Liljana & Mojškerc, Blaž & Toman, Aleš, 2016. "Demand forecasting with four-parameter exponential smoothing," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 162-173.
    8. Kourentzes, Nikolaos, 2014. "On intermittent demand model optimisation and selection," International Journal of Production Economics, Elsevier, vol. 156(C), pages 180-190.
    9. Xiang, Mengyuan & Rossi, Roberto & Martin-Barragan, Belen & Tarim, S. Armagan, 2018. "Computing non-stationary (s, S) policies using mixed integer linear programming," European Journal of Operational Research, Elsevier, vol. 271(2), pages 490-500.
    10. Ata Allah Taleizadeh, 2017. "Stochastic Multi-Objectives Supply Chain Optimization with Forecasting Partial Backordering Rate: A Novel Hybrid Method of Meta Goal Programming and Evolutionary Algorithms," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(04), pages 1-28, August.
    11. Saoud, Patrick & Kourentzes, Nikolaos & Boylan, John E., 2022. "Approximations for the Lead Time Variance: a Forecasting and Inventory Evaluation," Omega, Elsevier, vol. 110(C).
    12. Halkos, George & Kevork, Ilias, 2013. "Forecasting the optimal order quantity in the newsvendor model under a correlated demand," MPRA Paper 44189, University Library of Munich, Germany.
    13. Altay, Nezih & Litteral, Lewis A. & Rudisill, Frank, 2012. "Effects of correlation on intermittent demand forecasting and stock control," International Journal of Production Economics, Elsevier, vol. 135(1), pages 275-283.
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    16. Bruzda, Joanna, 2020. "Demand forecasting under fill rate constraints—The case of re-order points," International Journal of Forecasting, Elsevier, vol. 36(4), pages 1342-1361.

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