Intermittent Demand
Intermittent demand is a random demand, which the demand for a product or service appears sporadically, and lots of zero values exist in the demand data. (Croston,1972)
Expect the continuous production process, lots of demand events (materials, services…) are appear as intermittence. Although some of them can be converted to a continuous demand, for example, the sales of a product record per hour or minute might be intermittent, but it can be convert to the sales per day or month, and it still make sense.
However there also a certain amount of demand events that can not be converted form intermittent data to continuous data , otherwise they will loss the original purpose of the data. For example, the important equipment for manufacture, they can be used for quite a long period, but it can not be shortage; the spare parts of current working facility; the spare parts for transportation, like airplane. These intermittent demand materials often present as a significant part in company’s operation, if shortage, it might lead to a huge loss, for example, if a aircraft can not fly properly, each hour it stay on the ground will incur a cost more than $50,000.
Unfortunately, according to Johnston et al. (2003) these intermittent demand items can constitute up to 60% of the total stock value, and because those items often present as low consumption rate and long demand interval, therefore, the risk of obsolescence is much higher than other items.
Therefore, a accurate intermittent demand forecasting is a necessary for achieving better inventory management and company operation. Here will introduce 3 intermittent demand forecasting methods (these are no in the syllabus ^ ^).
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