Adapting Wright's modification of Holt's method to forecasting intermittent demand

Abstract

The challenge of accurately forecasting demand for spare parts is due to the intermittent nature of their demand. This study compares a recent modification of Croston's method and a method based on Holt's double exponential smoothing taking the firm's competitive priorities into consideration. Wright's modification of Holt's method is presented as a viable alternative when forecasting demand for spares especially when trend is present. Results indicate that firms focusing on minimizing inventory levels as a priority should consider forecasting using the Modified Croston's method. If their priority is high customer service, then the modified Holt's method is superior.