TY - BOOK

T1 - Forecasting seasonal demand : a serious limitation of Winters' forecasting procedure and the added value of product-aggregation

AU - Donselaar, van, K.H.

PY - 2003

Y1 - 2003

N2 - The well-known method for forecasting seasonal demand, Winters’ procedure, has a
serious drawback: if the relative demand uncertainty increases (e.g. due to larger
product assortments) or if the amount of historical demand data decreases (e.g. due
to smaller product life cycles), the quality of the forecasts deteriorates. In this paper
mathematical models are created to quantify these effects. These models help
researchers, teachers and practitioners to better understand why and when Winters’
forecasting procedure may deteriorate.
One way to improve again the performance of Winters’ procedure may be to use the
concept of product-aggregation: if different products have a similar seasonal pattern,
the seasonal indices from Winters’ method can be determined from the product
family’s aggregate demand. Mathematical modelling as well as simulation is used to
assess the added value of product-aggregation. It turns out that impressive
improvements can be achieved, especially in case demand uncertainty is high or
(when forecasting is applied in inventory systems) in case the lead times are large.

AB - The well-known method for forecasting seasonal demand, Winters’ procedure, has a
serious drawback: if the relative demand uncertainty increases (e.g. due to larger
product assortments) or if the amount of historical demand data decreases (e.g. due
to smaller product life cycles), the quality of the forecasts deteriorates. In this paper
mathematical models are created to quantify these effects. These models help
researchers, teachers and practitioners to better understand why and when Winters’
forecasting procedure may deteriorate.
One way to improve again the performance of Winters’ procedure may be to use the
concept of product-aggregation: if different products have a similar seasonal pattern,
the seasonal indices from Winters’ method can be determined from the product
family’s aggregate demand. Mathematical modelling as well as simulation is used to
assess the added value of product-aggregation. It turns out that impressive
improvements can be achieved, especially in case demand uncertainty is high or
(when forecasting is applied in inventory systems) in case the lead times are large.

M3 - Report

SN - 90-386-1997-9

T3 - BETA publicatie : working papers

BT - Forecasting seasonal demand : a serious limitation of Winters' forecasting procedure and the added value of product-aggregation

PB - Technische Universiteit Eindhoven

CY - Eindhoven

ER -