Calculating order-up-to levels for products with intermittent demand

Ruud Teunter and Babangida Sani

International Journal of Production Economics, 2009, vol. 118, issue 1, 82-86

Abstract: The Croston (1972. Forecasting and stock control for intermittent demands. Operational Research Quarterly 23, 289-303) method is the standard method for forecasting intermittent demand. It has been shown to perform well in various studies and is available in most commercial forecasting packages. However, little attention has been paid to linking the method with inventory control, i.e., using the generated forecasts to calculate the inventory control parameters. In this study we consider the most commonly applied order-up-to policy, and show how the forecasts can be used to calculate order-up-to levels. In a numerical study, we show that the calculated order-up-to levels lead to service levels that are close to their targets.

Keywords: Forecasting; Intermittent; demand; Croston's; method; Inventory; control (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (5)

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