Forecasting for the ordering and stock-holding of spare parts

Abstract

A modern military organization like the UK's Royal Air Force is dependent on readily available spare parts for in-service aircraft in order to maximize operational capability. A large proportion of spare parts are known to have an intermittent or slow-moving demand pattern, presenting particular problems as far as forecasting and inventory control are concerned. In this paper, we use extensive demand and replenishment lead-time data to assess the practical value of forecasting models put forward in the literature for addressing these problems. We use an analytical method for classifying the consumable inventory into smooth, irregular, slow-moving and intermittent demand patterns. Recent forecasting developments are compared against more commonly used methods across the identified demand patterns. One recently developed method, a modification to Croston's method referred to as the approximation method, is observed to provide significant reductions in the value of the stock-holdings required to attain a specified service level for all demand patterns.