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A study of different Croston-like forecasting methods
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Business Administration and Industrial Engineering.
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences.
2014 (English)Report (Other academic)
Abstract [en]

Croston (1972) presented an idea and method to separate ordinary exponential smoothing in two parts; in the time between demand, or withdrawals, and demand size. The forecasts are then updated only when there is a demand. Syntetos and Boylan (2005) recommended an adjustment of the Croston method due to a systematic error notified by Syntetos and Boylan (2001). Levén and Segerstedt (2004) suggested a modification of the Croston method where a demand rate is directly calculated when a demand has happened. In this paper real demand data is used to compare these variants of the Croston method. The idea with the modification of Levén and Segerstedt (2004) is that time between demand and demand size is not independent. But this modification has shown poor results. Therefore Wallström and Segerstedt (2010) suggest another modification, a “forward coverage” different to the previous “backward coverage”. Teunter et al (2011) suggest another method, a combination of updates every time period, for estimating the probability of a demand occasion, and every time a demand occurs for estimating demand size. All these different techniques are tested here. The different tech-niques are compared with Mean Squared Error (MSE), Cumulated Forecast Error (CFE) and with the new bias measure “Periods in Stock” (PIS). The tests show that modified Croston with “forward cover-age” in most cases seems to be to prefer compared to “backward coverage”, but still it overestimates demand. Ordinary Croston may be to prefer; therefore our tests show that Croston according to Syntetos and Boylan and also Teunter et al show a tendency to underestimate demand.

Place, publisher, year, edition, pages
Luleå, 2014. , 18 p.
Research subject
Industrial Logistics
URN: urn:nbn:se:ltu:diva-24548Local ID: b690cae1-d468-4566-b375-db8c5dfe106aOAI: diva2:997600
Godkänd; 2014; 20140206 (ysko)Available from: 2016-09-29 Created: 2016-09-29Bibliographically approved

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Segerstedt, AndersLevén, Erik
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