On the empirical performance of some new neural network methods for forecasting intermittent demand

Abstract

Abstract In this paper, new neural network (NN) methods are proposed to forecast intermittent demand and we empirically study their performance as compared to parametric and non-parametric forecasting methods proposed in the literature. The empirical investigation uses demand data for 5,135 spare parts for the fleet of aircrafts of an airline company. Three parametric benchmark methods are examined: single exponential smoothing (SES), Croston’s method and Syntetos–Boylan approximation, along with two bootstrapping methods: Willemain’s method and Zhou and Viswanathan’s method. The benchmark NN method considered in this paper is that proposed by Gutierrez et al. (2008) The paper shows the outperformance of SES and the NN methods for (a) their forecast accuracy and (b) their inventory efficiency (trade-off between holding volumes and backordering volumes) when compared to the other methods. Moreover, among the NN methods, a new proposed method is shown to be better than that proposed by Gutierrez et al. in terms of forecast accuracy and inventory efficiency.