The effect of demand forecasting choices on the circularity of production systems: a framework and case study

Abstract

Designing Circular Economy systems needs previous decisions that depend on Planning and Operation decisions. One of these decisions relates to the forecasting demand method, because it scales the needs of the production flow and the necessary resources. This study investigates how the selection of forecasting methods affects the circularity of production systems and shows a case study of particleboard manufacturers. Scenarios with different parameters were tested. Results showed an increase in the Material Flow Analysis (MFA) indicators between the methods Linear Regression initiation (HW-LR) vs. Extended Additive Holt-Winters (EAWH) and variations in the MCI when restrictions on supply capacity are added in terms of recycled raw material use. Also, a positive correlation was found between the error rate in demand forecasting and MCI. These results highlight the relevance of choosing the forecast method due to its impact on production planning activities and environmental performance toward a more circular production system.