In inventory management, hierarchical forecasting (HF) is a hot issue : families of items are formed for which total demand is forecasted; total forecast then is broken up to produce forecasts for the individual items.Since HF is a complicated procedure, analytical results are hard to obtain; consequently, most literature is based on simulations and case studies.This paper succeeds in following a more theoretical approach by simplifying the problem : we consider estimation instead of forecasting.So, from a random sample we estimate both total demand and the fraction of this total that individual items take; multiplying these two quantities gives a new estimate of individual demand.Then our research question is: can aggregation of items, followed by fractioning, lead to more accurate estimates of individual demand?Thirdly, a more practical situation is investigated by means of simulation.
|Place of Publication||Tilburg|
|Number of pages||15|
|Publication status||Published - 2006|
|Name||CentER Discussion Paper|
- hierarchical forecasting
- top-down approach