Production
http://www.production.periodikos.com.br/article/doi/10.1590/0103-6513.20200009
Production
Research Article

Comparison of selection and combination strategies for demand forecasting methods

Saymon Galvão Bandeira; Symone Gomes Soares Alcalá; Roberto Oliveira Vita; Talles Marcelo Gonçalves de Andrade Barbosa

Downloads: 2
Views: 738

Abstract

Abstract: Paper aims: In this study, effective strategies to combine and select forecasting methods are proposed. In the selection strategy, the best performing forecasting method from a pool of methods is selected based on its accuracy, whereas the combination strategies are based on the mean methods’ outputs and on the methods’ accuracy.

Originality: Despite the large amount of work in this area, the actual literature lacks of selection and combination strategies of forecasting methods for dealing with intermittent time series.

Research method: The included forecasting methods are state-of-the-art approaches applied to industrial and academics forecasting problems. Experiments were performed to evaluate the performance of the proposed strategies using a spare part data set of an industry of elevators and a data set from the M3-Competition.

Main findings: The results show that, in most cases, the accuracy of the demand forecasts can be improved when using the proposed selection and combination strategies.

Implications for theory and practice: The proposed methodology can be applied to forecasting problems, covering a variety of characteristics (e.g., intermittency, trend). The results reveal that combination strategies have potential application, perform better than state-of-the-art models, and have comparable accuracy in intermittent series. Thus, they can be employed to improve production planning activities.

Keywords

Time series forecasting, Forecast uncertainty, Technology forecasting, Combination strategies, Forecasting method selection

References

Adya, M., Collopy, F., Armstrong, J. S., & Kennedy, M. (2001). Automatic identification of time series features for rule-based forecasting. International Journal of Forecasting, 17(2), 143-157. http://dx.doi.org/10.1016/S0169-2070(01)00079-6.

Armstrong, J. S. (Ed.) (2001). Principles of forecasting (Vol. 30). USA: Springer. http://dx.doi.org/10.1007/978-0-306-47630-3.

Babai, M. Z., Dallery, Y., Boubaker, S., & Kalai, R. (2019). A new method to forecast intermittent demand in the presence of inventory obsolescence. International Journal of Production Economics, 209, 30-41. http://dx.doi.org/10.1016/j.ijpe.2018.01.026.

Barrow, D. K., & Kourentzes, N. (2016). Distributions of forecasting errors of forecast combinations: Implications for inventory management. International Journal of Production Economics, 177, 24-33. http://dx.doi.org/10.1016/j.ijpe.2016.03.017.

Choi, J. Y., & Lee, B. (2018). Combining LSTM Network Ensemble via Adaptive Weighting for Improved Time Series Forecasting. Mathematical Problems in Engineering, 2018, 1-8. http://dx.doi.org/10.1155/2018/2470171.

Collopy, F., & Armstrong, J. S. (1992). Rule-based forecasting: development and validation of an expert systems approach to combining time series extrapolations. Management Science, 38(10), 1394-1414. http://dx.doi.org/10.1287/mnsc.38.10.1394.

Croston, J. D. (1972). Forecasting and stock control for intermittent demands. Operational Research Quarterly (1970-1977), 23(3), 289-303. https://doi.org/10.2307/3007885.

Fildes, R., & Petropoulos, F. (2015). Simple versus complex selection rules for forecasting many time series. Journal of Business Research, 68(8), 1692-1701. http://dx.doi.org/10.1016/j.jbusres.2015.03.028.

Frank, A. G., Dalenogare, L. S., & Ayala, N. F. (2019). Industry 4.0 technologies: implementation patterns in manufacturing companies. International Journal of Production Economics, 210, 15-26. http://dx.doi.org/10.1016/j.ijpe.2019.01.004.

Franses, P. H., & Legerstee, R. (2011). Combining SKU-level sales forecasts from models and experts. Expert Systems with Applications, 38(3), 2365-2370. http://dx.doi.org/10.1016/j.eswa.2010.08.024.

Guo, F., Diao, J., Zhao, Q., Wang, D., & Sun, Q. (2017). A double-level combination approach for demand forecasting of repairable airplane spare parts based on turnover data. Computers & Industrial Engineering, 110, 92-108. http://dx.doi.org/10.1016/j.cie.2017.05.002.

Heinecke, G., Syntetos, A. A., & Wang, W. (2013). Forecasting-based SKU classification. International Journal of Production Economics, 143(2), 455-462. http://dx.doi.org/10.1016/j.ijpe.2011.11.020.

Holt, C. C. (2004). Forecasting seasonals and trends by exponentially weighted moving averages. International Journal of Forecasting, 20(1), 5-10. http://dx.doi.org/10.1016/j.ijforecast.2003.09.015.

Hyndman, R. J., & Athanasopoulos, G. (2018). Forecasting: principles and practice (2nd ed.). Melbourne, Australia: OTexts. Retrieved in 2020, January 31, from https://otexts.com/fpp2/

Hyndman, R. J., & Khandakar, Y. (2008). Automatic time series forecasting: the forecast package for R. Journal of Statistical Software, 27(3), 1-22. http://dx.doi.org/10.18637/jss.v027.i03.

Hyndman, R. J., & Koehler, A. B. (2006). Another look at measures of forecast accuracy. International Journal of Forecasting, 22(4), 679-688. http://dx.doi.org/10.1016/j.ijforecast.2006.03.001.

Kourentzes, N. (2013). Intermittent demand forecasts with neural networks. International Journal of Production Economics, 143(1), 198-206. http://dx.doi.org/10.1016/j.ijpe.2013.01.009.

Kourentzes, N., Barrow, D., & Petropoulos, F. (2019). Another look at forecast selection and combination: evidence from forecast pooling. International Journal of Production Economics, 209, 226-235. http://dx.doi.org/10.1016/j.ijpe.2018.05.019.

M3-Competition. (2020). M3-Competition - International Institute of Forecasters. Retrieved in 2020, January 31, from https://forecasters.org/resources/time-series-data/m3-competition/.

Makridakis, S., & Hibon, M. (2000). The M3-competition: results, conclusions and implications. International Journal of Forecasting, 16(4), 451-476. http://dx.doi.org/10.1016/S0169-2070(00)00057-1.

Makridakis, S., Spiliotis, E., & Assimakopoulos, V. (2018). The M4 Competition: Results, findings, conclusion and way forward. International Journal of Forecasting, 34(4), 802-808. http://dx.doi.org/10.1016/j.ijforecast.2018.06.001.

Moon, S., Simpson, A., & Hicks, C. (2013). The development of a classification model for predicting the performance of forecasting methods for naval spare parts demand. International Journal of Production Economics, 143(2), 449-454. http://dx.doi.org/10.1016/j.ijpe.2012.02.016.

Petropoulos, F., Kourentzes, N., Nikolopoulos, K., & Siemsen, E. (2018). Judgmental selection of forecasting models. Journal of Operations Management, 60(1), 34-46. http://dx.doi.org/10.1016/j.jom.2018.05.005.

Qi, M., & Zhang, G. P. (2001). An investigation of model selection criteria for neural network time series forecasting. European Journal of Operational Research, 132(3), 666-680. http://dx.doi.org/10.1016/S0377-2217(00)00171-5.

Rego, J. R., & Mesquita, M. A. (2015). Demand forecasting and inventory control: a simulation study on automotive spare parts. International Journal of Production Economics, 161, 1-16. http://dx.doi.org/10.1016/j.ijpe.2014.11.009.

Seabold, S., & Perktold, J. (2010). Statsmodels: econometric and statistical modeling with python. In Proceedings of the 9th Python in Science Conference (pp. 92-96). USA: SciPy.org. http://dx.doi.org/10.25080/Majora-92bf1922-011.

Soares, S., Antunes, C., & Araújo, R. (2012). A genetic algorithm for designing neural network ensembles. In Proceedings of the Fourteenth International Conference on Genetic and Evolutionary Computation Conference - GECCO ’12 (pp. 681-688). Canadá: ACM. http://dx.doi.org/10.1145/2330163.2330259.

Statsmodels. (2020). StatsModels: Statistics in Python - statsmodels v0.10.1 documentation. Retrieved in 2020, January 31, from https://www.statsmodels.org/v0.10.1/#.

Syntetos, A. A., Boylan, J. E., & Croston, J. D. (2005). On the categorization of demand patterns. The Journal of the Operational Research Society, 56(5), 495-503. http://dx.doi.org/10.1057/palgrave.jors.2601841.

Teunter, R. H., & Duncan, L. (2009). Forecasting intermittent demand: a comparative study. The Journal of the Operational Research Society, 60(3), 321-329. http://dx.doi.org/10.1057/palgrave.jors.2602569.

Wang, X., & Petropoulos, F. (2016). To select or to combine? The inventory performance of model and expert forecasts. International Journal of Production Research, 54(17), 5271-5282. http://dx.doi.org/10.1080/00207543.2016.1167983.

Yu, Y., Choi, T.-M., & Hui, C.-L. (2011). An intelligent fast sales forecasting model for fashion products. Expert Systems with Applications, 38(6), 7373-7379. http://dx.doi.org/10.1016/j.eswa.2010.12.089.
 


Submitted date:
01/31/2020

Accepted date:
08/10/2020

5f6cf5450e88251b5297b914 production Articles
Links & Downloads

Production

Share this page
Page Sections