Forecasting spare part extractions from returned systems in a closed-loop supply chain

Abstract

In a closed-loop supply chain, the reuse of spare parts from returned systems is a recovery process referred to as spare parts harvesting. The unpredictability of the parts supply capacity from returned systems is a challenge in healthcare industry as product returns depend on several factors and regulatory and legal requirements must be respected. The focus of this paper is to provide a forecasting method of harvested parts supply capacity in healthcare industry that combines statistical methods with field information and business knowledge to provide an informed forecast. We propose a dynamic forecasting process that gets updated monthly employing TSB-Croston, 12-month moving average, ARIMA, ARIMA with seasonality, and a new business knowledge based model. A prediction method of the inventory state changes is introduced. The forecasters judgment is transformed into validation rules for an automatic forecast adjustment. This method is evaluated on more than 1400 time series with intermittent behaviour representing General Electric Healthcare spare parts harvesting history. We evaluate the performance of our method compared to each tested model using a modified MAPE, MAE, MSE, and RMSE. By means of the designed method, the forecast performance is improved compared to all tested models.