Simulation approach in stock control of products with

sporadic demand
Jakub Dyntar, Eva Kemrov, Ivan Gros
The stock management of products with sporadic demand is one of the main problems for
many entrepreneurs. It is possible to find cases of the sporadic demand in the area of car, aircraft
and unique assembly lines spare parts manufacturing and distribution. The problems with
assessing the sporadic demand are caused not only by significant variability and a relatively small
demand but, above all, by prolonged periods with no demand at all. Classical forecasting methods
(for example exponential smoothing, moving average methods, regression analysis, etc.) used in
common supply management systems are ineffective when applied to sporadic demand for
mainly the following reasons:

Classical methods do not take into account the importance of zero demand periods.

Classical methods are not focused on the distribution function forecast of demand during
the order lead time period, which is very important for the effective flow of such
materials.

Application of inappropriate methods in sporadic demand product stock management leads to

insufficient stock and the inability to fulfill orders consequently causing significant economic
loss. Situations leading to high stocks of these products have a similarly negative effect on the
management efficiency. The importance of forecasting influence is obvious from Figure 1,
showing the typical structure of spare parts distribution system. The distributor has to maintain
high stock levels in order to be able to meet orders of repair shops etc., because lead times for
spare parts delivery reorders form manufacturers are relative long. Low increase in accuracy of
forecasting leads in the above mentioned system to significant decrease of stock levels.
Fig.1: Supply system
Spare parts,
medicaments or
capital goods
manufacturers

Distributors
Lead time 1-3
months

Stock level ???

Order level ???

Lead time 1-3

days

Service

Part of the research plan MSM 6046137306

Jakub Dyntar, MSc.,PhD., Institute of Chemical Technology Prague, jakub.dyntar@vscht.cz

Eva Kemrov, MSc., Institute of Chemical Technology Prague, eva.kemrova@vscht.cz

Prof. Ivan Gros, MSc.,CSc., Institute of Chemical Technology Prague, ivan.gros@vscht.cz

Introduction
Crostons method and its modifications are the most commonly used methods in sporadic
demand of product stock management systems. This method eliminates the drawbacks of
classical exponential smoothing and secures sufficient stock levels during order lead time period.
The advantage of this method is its reliability and robustness, but also the relative simplicity in
computer processing. Crostons method solves only the question of the reorder point, i.e. when to
demand restocking in order to remove the possibility of stock-out. The method does not solve the
problem of restocking delivery volume and the mechanics of ordering. The questions are how to
refill stocks and what level of restocking deliveries to implement in order to secure economic
efficiency while still maintaining demanded service levels.
One of the promising ways of solving stated problems is to apply the dynamic simulation
method. The authors workplace has had experience in implementing this method even in other
areas of management. The aim of this article is to introduce sporadic demand product stock
management method based on dynamic simulation, which would offer simple and easily
interpretable answers on basic questions connected to effective stock management, which are:

reorder stock level assessment,

replenishment orders volume assessment,

choice of appropriate ordering manner,

optimal stock level assessment.

Theoretical background of research

The majority of common stock management systems utilize restocking level as the leading
variable. This variable represents the level of stock capable, with certain probability, of meeting
the demand during the time period required for order fulfillment. The calculation of reorder point
is often based on the average demand and its variable assessment using forecasting methods.
Further on we will sum up forecasting methods used for reorder stock level determination.
1.1

Exponential smoothing

Simple exponential smoothing (Brown, 1959), alternatively exponential smoothing for time
series with trend (Holt, 1957) or seasonal fluctuations (Winters, 1960) belong to the most
commonly used demand forecasting methods in common stock management systems. These
methods provide unsatisfactory results when applied to sporadic demand, the main reason being
the inability to take note of the zero demand periods importance. Exponential smoothing model
can be described by the following equation system:

where

et = yt yt-1,

(1)

yt = yt-1 et,

(2)

mt = (1-) mt-1 + et,

(3)

yt = demand in time t
2

yt = average demand forecast in time t

et = forecast error
mt = average deviation of forecast deficiency
Demand forecast, equations (1) and (2) is therefore weighted average of past demand volume,
where is forecast coefficient, originally inverted value of time series length used for demand
forecast.
Equation (4) than determines the calculation of reorder point level Rt:
Rt = yt + k mt,
where
1.2

(4)

k = safety factor dependent on demand distribution type

Crostons method

Croston (1972) suggested modification of exponential smoothing for sporadic demand

product time series. The core of this method is not only the estimation of average demand
volume, but also estimation of time interval length between two non-zero demands. Following set
of equations describes Crostons method:

where

et = yt zt-1,

(5)

zt = zt-1 et,

(6)

mt = (1-) mt-1 + et,

(7)

pt = pt-1 (1)+ q,

(8)

yt = zt / pt ,

(9)

Rt = yt + k mt,

(10)

q = 1,

(11)

q = q + 1,

(12)

zt = the average demand forecast in time t

pt = the estimation of time interval length between two non-zero demands
q = number of periods between two non-zero demand periods

The difference between Crostons approach and exponential smoothing is that the estimation
of average demand volume takes place only in the non-zero demand periods. If the demand
equals zero, average demand volume is the same as in the previous period.
Rao (1973) pointed out the mistake in deriving some of Crostons method attributes, without
any effect on the model described by equations (5)-(12).
Many authors have proven better results of Crostons method when compared to exponential
smoothing. Willemain et al. (1994) compared the efficiency of Crostons method and exponential
3

smoothing and found that Crostons method achieves better results, even though the benefit was
insignificant in some cases. Similar results can be found in the work of Johnston and Boylan
(1996), who also pointed out that Crostons method leads to better results if the average interval
between non-zero demand periods is higher than 1.25. Sani and Kingsman (1997) have tested
various methods of demand forecasting on real data from spare parts warehouse in Great Britain
and found that best result are achieved by using the method of moving average followed by
Crostons method. Their study is extremely valuable because it is one of the few works focused
on the economic efficiency of the supplying process.
1.3

Crostons method modifications

Even with its positive attributes, Crostons method suffers a major drawback. Syntetos and
Boylan (2001) have noted that the demand volume estimation is positively deviated and have
suggested a modification of Crostons method. This modification consists in adjusting the
equation (9):
yt = (1-/2) zt / pt

(13)

Improvement of the methods efficiency has been proven by Syntetos and Boylan (2005,
2006) or Syntetos, Boylan and Croston (2005).
Levn and Segersted (2004) have tried to create an universal approach applicable to common
and sporadic demand by modifying equation (9) of original Crostons method and designed
equation for estimating average demand volume:
yt = zt / pt + (1-) yt-1

(14)

However, this modification leads to even higher positive deviations, proven in the work of
Teunter and Sani (2009). These authors have pointed out that Syntetos and Boylans modification
removes the positive deviation of the original Crostons method, but in some cases their
approach can lead to negative deviation, which they called dumping effect. Teunter and Sani
point out that Crostons methods give best results when the portion of zero demand periods is
relatively low, while Syntetos and Boylans modification gives good results in cases where a
high portion of zero demand periods occurs . Based on Syntetos and Boylans work, Teunter and
Sani designed their own modification of Crostons method (9):
yt = (1-/2) zt / (pt - /2)

(15)

Testing their modification on randomly generated data and comparing it with Crostons
method, Teunter and Sani arrived at several interesting conclusions. Firstly they managed to
prove that the average demand volume estimation described by equation (15) is not deviated.
Furthermore, the deviations of original and modified Crostons method were proved to be caused
by the probability of demand and forecast coefficient choice , while distribution type and
variability of demand volume is insignificant. Low deviation of the method also suppresses the
necessity of time series classification into groups, as suggested by Syntetos, Boylan and Croston
(2005), significantly simplifying the method for computer processing

1.4

Simulation method bootstrapping

In 2004 Smart, Willemain and Schwarz have introduced a brand new approach in sporadic
demand product stock management. Their simulation method, known also as bootstrapping is
not aimed at the average demand volume forecast like Crostons method and its modifications,
but it estimates the distribution function of these volumes. The principle of this method is
simple. From timeline obtained in the past, random k-sets of demands are chosen, where k is the
order lead time length. Sums of k generated values are created by theoretically possible
demanded volumes during the order lead time term. If a sufficient number of generated k-sets is
available, it is possible to create demand frequency distribution during order lead time term and
its distribution function. Reorder point level for required level is then easily identified on the x
axis. The example of demand distribution function during order lead time term and reorder point
identification for 2 periods and required service level 98% is presented in Figure 2:
Fig. 2: Demand distribution function during order fulfillment term
Distribun
funkce
poptvek
(TVO = 2)
Distribution
function
(LeadTime
= 2)
Pravdpodobnost[%]
Probability [%]

100%
80%
60%

Reorder point

40%
20%
0%
0

Poptvka
[ks]
Demand
[Pieces]

Smarts method is simple and fitting for computer processing. Unfortunately its contribution
has not been sufficiently proved, pointed out by Gardner and Koehler (2005) in their
commentary.
1.5

Dynamic simulation

Dynamic simulation presents an approach capable of taking into account various random
factors and complex logic connections, which mathematic models are able to describe only to a
limited measure. Simulation can be described as the creation of a logic-mathematical model of
the real object, its aim being the description of object, determination of its function and
estimation of its future behavior. The object simulation model, created by computer, enables the
user to estimate system behavior during internal and external condition changes, optimize process
regarding set criteria (profit, costs, reliability, etc.), to compare various alternatives of the process
arrangement and choose an arrangement with appropriate efficiency. Computer model removes
the risk of negative impact on real systems and provides required values, matching the aims of
the simulation study. The main advantages of simulations can be summarized by the following
points:

Simulation allows user to test suggested variants in advance without the necessity of
allocating resources for their implementation.

Simulation allows user to slow down or accelerate time.

Simulation helps to find the reasons for the phenomena taking place and enables its
detailed study.

Simulation model offers the possibility of creating scenarios and provides answers to
questions what happens if.

Simulation helps to verify efficiency of planned investments before their actual

realization.

There are many specialized software applications based on dynamic simulation. We have
good working experiences with products such as Witness or SIMUL8, providing an environment
for simulation of even complex models. The core of these software products is a set of predefined
elements, connected by logical parameters generated in a simple programming language. The
advantage of these applications is the possibility of visualization of simulated systems. However,
less complex problems can be successfully solved using Visual Basic for Applications, a part of
MS Excel.

2
2.1

Dynamic simulation of stock management

Basic model

Dynamic simulation of stock management is based on the recap of past warehouse stock
movement under conditions of the chosen stock management system. The simulation model input
is past demand time series of product and order lead time term. Stock management system is
described by stock replenishment system, i.e. when to generate replenishment order and how to
determine its size. Warehouse stock movements are the fulfilled needs of customers (stock
decrease) and replenishment order arrivals (stock increase).
The entire system of stock movement for automobile spare part demand time series is shown
in Table 1. Let us consider the order lead time term of the length of 2 periods and stock
management system with constant replenishment order of 5 pieces and reorder point of 2 pieces.
Initial stock of given stock product in period 1 is 2 pieces.
Tab. 1: Spare part movement in Q-System of stock management
Period t
Starting stock Pt [Pieces]
Demand St [Pieces]
Generate order Q [Pieces]
Order arrival Ot [Pieces]
Missing amount Ct [Pices]
Final stock level Kt [Pices]

1
2
1
5

2
1
0

3
1
0

4
1
2

5
4
0

6
4
0

7
4
0

8
4
3
5

9
1
1

10
0
0

5
1

Starting state of system in each period is, with the exception of period 1, described by final
stock level of preceding period. Order generated in the period corresponding to order lead time
term is added to that of the stock and then appropriate demand is subtracted. The following step
is to find out if it is necessary to create a new order. From the logic of the chosen system it is
6

obvious that the order will be generated in case the difference between starting stock level and
demand increased by eventual replenishment order arrival is below the reorder point. With the
exception of cases when replenishment order was generated in preceding periods and are being
realized. Final stock level is used in the next step as the starting state of the system and the entire
calculation is repeated. It is obvious that for set parameters (reorder point= 2 pieces,
replenishment order = 5 pieces) 2 replenishment orders would be generated in period t=1 and t=8
in this stock management system. The key point of dynamic simulation is the choice of the stock
management system and determination of optimal level of parameters, representing the system. If
we are to decide if the chosen solution meets required efficiency, we need to determine the set of
solutions (i.e. group of stock management systems) and criteria of evaluation. This problem will
be examined more closely.
2.2

Stock management system choice

Three basic stock management systems are described in literature. Their main characteristics
are (Winston, 1994):
Q-system, reorder point model with constant order quantity
Operating parameter of this system is reorder point, while replenishment order size is
constant. Order is generated if stock level, represented by final stock level is below reorder point.
P- system, periodic review inventory system with upper replenish level and constant
reorder period
In P-system orders are placed at intervals with constant length, while replenishment order
size is calculated by:
Q = xh Kt,
where

(16)

xh = upper reorder level

Kt = warehouse stock level in time t

PQ-system
PQ-system combines both mentioned systems. Term of order generation is based on reorder
point level, replenishment order size is calculated by equation (16).
Operating parameters of mentioned stock management systems are shown in Table 2:
Tab. 2: Operating parameters of stock management systems
System

Operating parameters
Reorder point, constant replenishment
order
Reorder point, dynamic replenishment
order size
Ordering interval length, dynamic
replenishment order size

Q
PQ
P

2.3

Simulation efficiency evaluation

Let us find an answer to the question of how to determine whether the chosen solution
represented by chosen stock management system and combination of decision parameters will
secure required efficiency of the whole system.
The first step will be the survey weather the customer demands were fulfilled completely or
not in each period. If we assume the situation described it Table 1, missing amount Ct in period t
will be defined as:
Ct = St Ot Pt if St > Ot + Pt,

(17)

and total missing amount C:

T

C Ct

(18)

t 1

To assess fulfillment of customers demands we use the simple indicator service level SL:
SL = (1 - C/S)100%,

(19)

where

S St = total demanded quantity in period 1,2, ...... T

t 1

Therefore service level indicator means what percentage of total demanded quantity can be
immediately released from stock.
To calculate economic efficiency of chosen system we can use stock purchasing and
maintenance costs (Winston, 1994) and taking into account a possible penalization for inability to
fulfill required service level. Stock purchasing costs are expressed as a function of viable orders
number:
No = o no,
where

(20)

o = number of realized orders

no = costs for one order

Maintenance stock level costs can be determined as a function of average stock level xp:
Ns = xp T c ns,
where

(21)

T = period length
c = product unite price
ns = maintenance stock costs as % of average stock in monetary units in period of
length T

Total purchasing and maintenance cost can be easily formulated as:

Ntot = No + Ns + P,
where

P = the effect of inability to fulfill demanded service level

8

(22)

Average stock level can be calculated as arithmetic average of final stock levels in periods 1,
2....T:
T

xp

t 1

(23)

If the organization uses continuous stock level monitoring, it is possible to use more accurate
methods of average stock level calculation.
2.4

Decision parameters assessment of chosen stock management system and their

optimization

By the choice of the stock management system from the possible set we determine the
manner of replenishment order generation, time of their generation and their size will be assessed
by systems decision parameters calculations. With the exception of P-system, where the order
generation assessment is different, the moment determined by term of stock level decrease on
reorder point can be assessed by some of the forecasting methods. Replenishment order size can
be obtained by repeating the simulation in an appropriate parameters value range by choosing
decision parameters combinations securing required service level. The other possibility of
operating parameters assessing is to repeat the simulation in fittingly defined values ranges of all
decision parameters. Stock management system choice and operating parameters calculation can
be schematically described as follows:
Fig. 3: Stock management system choice and combination of decision operating
parameters generation
Choice of stock management system

Is chosen system a P-system?

NO

YES

Reorder point calculation method

Generate decision parameters
combinations
Forecasting method

Combine reorder
point with other
decision parameters

Simulate warehouse stock movement

Calculate SL by formula (19)

Note operating parameters combinations

with corresponding SL

It is obvious that by repeating the simulation for various stock management systems and
various combinations of decision parameters we obtain multiple possible solutions securing
required service level. If we add viable order number monitoring and average stock level
calculation to the simulation model, we can optimize it by using the formula (22). The aim of
optimization is to find a stock management system with minimal purchasing and maintenance
costs while retaining required service level described by the formula (19).

Application of dynamic simulation on sporadic demand products

The table below shows demanded quantities of a specific automobile spare part in previous
periods.
Tab 3: Automobile spare part demand timeline
Period t
St

1
4

2
5

3
0

4
0

5
0

6
0

7
0

8
0

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
0 1 6 0 2 4 0 0 5 0 0 1 0 1 8 2 5

Period t 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
St
8 7 0 6 0 5 9 0 0 8 0 0 0 0 0 0 4 0 0 2 0 0 5 0 0

Using dynamic simulation in the setting of MS Excel, the authors have tried to find a stock
management system characterized by decision parameters combinations with minimal purchasing
and maintenance costs while retaining required service level. Values of input parameters used in
calculations are shown in Table 4.
Tab. 4: Experiment input parameters
c
185
Euro/piece
ns
25%
% from average stock level in Euro yearly
no
37
Euro/1 order
P
1 000 000 000
S
98
Pieces
T
50
Number of time periods
SL
98%
%
Lead time
3
Time periods
Starting stock level
9
Pieces
The choice of system was limited to Q-system, PQ-system and P-system, characterized by
decision parameters shown in Table 2. These parameters were calculated using total simulation or
the reorder point calculation method. Implemented experiment variants including the operating
parameters calculation are shown in Table 5.
Tab. 5: Implemented experiment variants
Variant Description
Signal level
Replenishment order size
1
Q&B
Bootstrapping Smart-Willemain (B)
Dynamic simulation
2
PQ&B
Bootstrapping Smart-Willemain
Dynamic simulation
3
Q&ES
Exponential soothing (ES)
Dynamic simulation
4
PQ&ES
Exponential soothing
Dynamic simulation
5
Q&CR
Crostons method (CR)
Dynamic simulation
6
PQ&CR
Crostons method
Dynamic simulation
7
Q&SB
Syntetos-Boylan method (SB)
Dynamic simulation
8
PQ&SB
Syntetos-Boylan method
Dynamic simulation

10

9
10
11
12
13
14
15

Q&LS
PQ&LS
Q&TS
PQ&TS
Q
PQ
P

Levn-Segersteds method (LS)

Levn-Segersteds method
Teunter-Sanihs method (TS)
Teunter-Sanish method
Dynamic simulation
Dynamic simulation
Dynamic simulation

Dynamic simulation
Dynamic simulation
Dynamic simulation
Dynamic simulation
Dynamic simulation
Dynamic simulation
Dynamic simulation

Reorder point calculation realized with the aid of forecasting methods was carried out using
forecasting coefficient = 0.1; k = 3; .The total stock management system simulation (i.e.
determination of both parameters using simulation) was carried out by using the total
enumeration method in the value range of 1-98 for decision parameters of the Q and PQ-system
and ordering interval range 1-50 for the P-system. Results of the experiment are shown in Table
6.
Tab. 6: Experiment outputs
Variant

Description

14
4
6
8
10
12
13
2
15
5
7
11
3
9
1

PQsystem
PQstm+SES
PQstm+Croston
PQstm+S&B
PQstm+L&S
PQstm+T&S
Qsystem
PQstm+Bting
Psystem
Qstm+Croston
Qstm+S&B
Qstm+T&S
Qstm+SES
Qstm+L&S
Qstm+Bting

Signal level
Q
xp
C
[pieces/priod] [pieces] [pieces] Ns[Euro] No[Euro] Ntot[Euro] [pieces]

15
20
18
18
20
18
15
22
2
18
18
18
20
20
22

30
28
28
28
28
28
25
29
28
19
19
19
22
22
27

14,88
15,60
15,60
15,60
15,60
15,60
16,50
16,52
16,56
17,66
17,66
17,66
20,04
20,04
22,80

2867
3006
3006
3006
3006
3006
3179
3183
3191
3403
3403
3403
3861
3861
4393

222
296
296
296
296
296
185
296
407
222
222
222
185
185
185

3089
3302
3302
3302
3302
3302
3364
3479
3598
3625
3625
3625
4046
4046
4578

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

US

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Simulated variants were arranged by ascending values of total costs. The best variant would
be PQ-system with reorder point 15 pieces and replenishment order size 30 pieces. The outputs
have verified the assumption that decisive parameter values obtained by total simulations provide
better, or at least the same efficiency of a given system compared to values obtained by the
combination of a forecasting method for calculating the reorder point and dynamic simulation for
assessing restocking order level. It is obvious that when using "Total Enumeration" method in
total simulation of stock movement, a combination containing reorder point level obtained by the
forecasting method will be involved when sufficient parameters value range is used. This fact
evokes not only the question of how to determine decision parameter value range in order to find
optimal value of criterial function, but also in order to search the range of possible solutions.
Total simulation of stock movement will become rational only when system efficiency is
increased compared to using forecasting methods to calculate restocking point and time required
for calculation. This problem is largely insignificant in relation to products with sporadic demand
because of the relatively low demand numbers in the individual period. Total demand is therefore
not great, leading to a relatively narrow range of operating parameter values, and therefore
11

minimal time is required for calculation. The following objective of the authors is to modify the
dynamic simulation method to make it universally applicable even for a large portfolio of
existing items, not showing the attributes of sporadic demand.

Conclusion
The aim of this article was to introduce dynamic simulation as an effective method of
sporadic demand product stock management system. The authors created 15 algorithms working
on the basis of stock movement simulation in the setting of the given stock management system
and additional decision parameter optimizations using cost function. Issuing from experiments
carried out on real auto part demand time series, the hypothesis has proven that operating
parameter values obtained using total simulations provide better, or at least the same efficiency of
the given system compared to values obtained by using the combination of a number of
predicting method for the calculation the restocking point. The ability of dynamic simulation to
find an optimal stock management system characterized by operating parameters combinations
predetermines this method universally not only for sporadic demand products stock management
but also for stock management. The problem of simulation approach in the current form lies in
the manner of searching for possible solutions, the excessive time requirement is for that reason
unsuitable for managing large portfolio of stock with varying demand. It is obvious that further
research activities of the authors will be aimed at targeting this drawback.
Even when considering its drawbacks, dynamic simulation is a promising method, capable of
efficiently managing the process relevant to restocking and maintaining the inventory and,
therefore, contributes to lowering the cost associated with stocks. In the case of many
organizations the costs are enormous and, therefore, even a small decrease of stock levels
represents considerable savings. It is therefore necessary to pay special attention to the
development of appropriate stock management methods.

12

Appendix
Q -system simulation model created in language VBA:
Sub Qsystem()
'Initialization of variables
Q, Signal, StartStock, LeadTime, T

For t = 1 to T
'Set P(t)

If t = 1 then
P(t) = StartStock
Else
P(t) =K(t-1)
End If
'Delivery arrival
If oo = t Then
P(t) = P(t) + Q
oo = 0
End If
'Dispatch of demanded quantity
If P(t) >= S(t) Then
'Sufficient stock

P(t) = P(t) - S(t)

ElseIf P(t) < S(t) Then 'Stock-out
C = C + S(t) - P(t)
P(t) = 0
End If
'Order generation
If P(t) <= Signal And oo = 0 Then
oo = t + LeadTime + 1
End If
'Set K(t)

K(t) = P(t)
Next
EndSub

13

References
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]

[9]
[10]
[11]
[12]

[13]

[14]
[15]
[16]

Brown, R. G.: Statistical forecasting for inventory control, Mc Graw-Hill, New York,
1959
Croston, J. D.: Forecasting and stock control for intermittent demands, Operational
research quarterly 23, 289-303, 1972
Gardner, Koehler: Comments on a patented bootstrapping method for forecasting
intermittent demand, International Journal of Forecasting 21, 617 618, 2005
Holt, C. C.: Forecasting seasonal and trends by exponentially weighted averages,
Carnegie Institute of technology, Pittsburg, Pennsylvania, 1957
Johnston, Boylan: Forecasting for items with intermittent demand, Journal of the
operational research society 47, 113-121, 1996
Levn, Segersted: Inventory control with a modified Croston procedure and Erlang
distribution, International journal of production economics 90, 361-367, 2004
Rao, A. V.: A comment on: Forecasting and stock control for intermittent demands,
Operational research quarterly 24, 639-640, 1973
Sani, Kingsman: Selecting the best periodic inventory control and demand forecasting
methods for low demand items, Journal of the operational research society 48, 700-713,
1997
Syntetos, Boylan: On the bias of intermittent demand estimates, International journal of
production economics 71, 457-466, 2001
Syntetos, Boylan: The accuracy of intermittent demand estimates, International journal of
forecasting 21, 303-314, 2005
Syntetos, Boylan, Croston: On the categorisation of demand patterns, Journal of the
operational research society 56, 495-503, 2005
Teunter, R.H., Sani B.: On the bias of Crostons forecasting method, European Journal of
Operational Research , Volume 194, Issue 1, 1 April 2009, Pages 177-183, ISSN 03772217
Willemain, Smart, Shockor, DeSautels: Forecasting intermittent demand in
manufacturing: a comparative evaluation of Crostons method, International journal of
forecasting 10, 529-538, 1994
Willemain, Smart, Schwarz: A new approach to forecasting intermittent demand for
service parts inventories, International journal of forecasting 20, 375-387, 2004
Winston, W. L.: Operations research: applications and algorithms, ITP, 1994
Winters, P. R.: Forecasting sales by exponentially weighted moving averages, Mgmt Sci.
6, 324, 1960

14

Simulation approach in stock control of products with sporadic demand

Jakub Dyntar, Eva Kemrov, Ivan Gros
ABSTRACT
Crostons method and its modifications are the most commonly used methods in sporadic
demand of product stock management systems. This method eliminates the drawbacks of
classical exponential smoothing and secures sufficient stock levels during order lead time period.
The disadvantage of Crostons method is the fact that it solves only the question of the reorder
point but does not solve the problem of restocking delivery volume and the mechanism of
ordering. The questions are how to refill stocks and what level of restocking deliveries to
implement in order to secure economic efficiency while still maintaining demanded service
levels. One of the promising ways of solving stated problems is to apply the dynamic simulation
method. The aim of this article is to introduce sporadic demand product stock management
method based on dynamic simulation, which would offer simple and easily interpretable answers
on basic questions connected to effective stock management.
Keywords: Forecasting, Simulation, Inventory Management, Sporadic Demand
Jel classification: C53

15