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Stochastic models underlying Croston's method for intermittent demand forecasting

  • Rob J. Hyndman

    (Monash University, Australia)

  • Lydia Shenstone

    (Monash University, Australia)

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. Copyright © 2005 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/for.963
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Forecasting.

Volume (Year): 24 (2005)
Issue (Month): 6 ()
Pages: 389-402

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Handle: RePEc:jof:jforec:v:24:y:2005:i:6:p:389-402
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/2966

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