### Abstract

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.

Original language | English |
---|---|

Place of Publication | Tilburg |

Publisher | Operations research |

Number of pages | 15 |

Volume | 2006-86 |

Publication status | Published - 2006 |

### Publication series

Name | CentER Discussion Paper |
---|---|

Volume | 2006-86 |

### Keywords

- hierarchical forecasting
- aggregation
- top-down approach

## Fingerprint Dive into the research topics of 'Hierarchical Estimation as Basis for Hierarchical Forecasting'. Together they form a unique fingerprint.

## Cite this

Strijbosch, L. W. G., Heuts, R. M. J., & Moors, J. J. A. (2006).

*Hierarchical Estimation as Basis for Hierarchical Forecasting*. (CentER Discussion Paper; Vol. 2006-86). Operations research.