Evaluation of forecasting methods for intermittent parts demand in the field of aviation: a predictive model

Abstract

Owing to the sporadic nature of demand for aircraft maintenance repair parts, airline operators perceive difficulties in forecasting and are still looking for superior forecasting methods. This paper deals with techniques applicable to predicting spare parts demand for airline fleets. The experimental results of 13 forecasting methods, including those used by aviation companies, are examined and clarified through statistical analysis. The general linear model approach is used to explain the variation attributable to different experimental factors and their interactions. Actual historical data for hard-time and condition-monitoring components from an airlines operator are used, in order to compare different forecasting methods when facing intermittent demand. The results confirm the continued superiority of the weighted moving average, Holt and Croston method for intermittent demand, whereas most commonly used methods by airlines are found to be questionable, consistently producing poor forecasting performance. We have, however, devised a new approach to forecasting evaluation, a predictive error-forecasting model which compares and evaluates forecasting methods based on their factor levels when faced with intermittent demand. A simple example is presented to illustrate the performance of the mathematical model. It is suggested that these findings may be applicable to other industrial sectors, which have similar demand patterns to those of airlines. Scope and purpose Demand forecasting is one of the most crucial issues of inventory management. Forecasts, which form the basis for the planning of inventory levels, are probably the biggest challenge in the repair and overhaul industry, as the one common problem facing airlines throughout the world is the need to know the short-term part demand forecast with the highest possible degree of accuracy. The high cost of modern aircraft and the expense of such repairable spares as aircraft engines and avionics constitute a large part of the total investment of many airline operators. These parts, though low in demand, are critical to operations and their unavailability can lead to excessive down time costs. Most airline materials managers deal with intermittent demand, which tends to be random and has a large proportion of zero values. In an effort to achieve this, the study has presented a model that could be of great benefit to airline operators and other maintenance service organisations. It will enable them to select in advance the appropriate forecasting method that better meets their cyclical demand for parts. This approach is consistent with the purpose of this study, which aims to compare different forecasting methods when faced with intermittent demand.