Proceedings of the 20th World Congress

The International
Proceedings Federation
of the 20th Worldof Congress
Automatic Control
Proceedings
Toulouse, of theJuly
France, 20th9-14,
World Available online at www.sciencedirect.com
Congress
2017
The International Federation of Automatic Control
The International Federation of Automatic Control
Toulouse, France, July 9-14, 2017
Toulouse, France, July 9-14, 2017
ScienceDirect
IFAC PapersOnLine 50-1 (2017) 15241–15246
Improved Forecasts for uncertain and unpredictable Spare Parts Demand in
Improved
Improved Forecasts for
for uncertain
Business
Forecasts Aircraft's
uncertain and
and unpredictable
with Bootstrap Method
unpredictable Spare
Spare Parts
Parts Demand
Demand in
in
Business
Business
N. Ahmadi Aircraft's
Aircraft's
Mobarakeh*, with Bootstrap
with Bootstrap
M. K. Shahzad, Method
Method
*A. Baboli*, R. Tonadre**, ***
N.
N. Ahmadi
* Université
Ahmadi deMobarakeh*, M.
M. K.
Lyon, INSA-Lyon,
Mobarakeh*, Shahzad,
K.DISP *A.
*A. Baboli*,
Laboratory
Shahzad, EA4570,R.
Baboli*, Tonadre**,
R.Villeurbanne, ***
Tonadre**, France
***
** Université
** Dassault
Université de
de Lyon,
Aviation,Lyon, INSA-Lyon,
7, rond-point
INSA-Lyon, DISP
DISP Laboratory
des Champs EA4570,
Elysées Marcel
Laboratory EA4570, Villeurbanne,
Dassault France
75008 Paris,
Villeurbanne, FranceFrance
**
** Dassault Aviation, 7, rond-point des Champs Elysées Marcel Dassault 75008 Paris, France
Dassault
*** Aviation,
Dassault Falcon 7,
Jetrond-point
Corp. des Champs
Teterboro Airport,Elysées Marcel
Box 2000 , SouthDassault 75008
Hackensack, Paris,
NJ 07606 , USA
France
*** Dassault Falcon
(negar.ahmadi2270@gmail.com,Jet Corp. Teterboro Airport, Box 2000, South Hackensack,
muhammad-kashif.shahzad@insa-lyon.fr, NJ 07606, USA
armand.baboli@insa-lyon.fr,
*** Dassault Falcon Jet Corp. Teterboro Airport, Box 2000, South Hackensack, NJ 07606, USA
(negar.ahmadi2270@gmail.com,
(negar.ahmadi2270@gmail.com, muhammad-kashif.shahzad@insa-lyon.fr,
romy.tonadre@falconjet.com) 
muhammad-kashif.shahzad@insa-lyon.fr, armand.baboli@insa-lyon.fr,
armand.baboli@insa-lyon.fr,
romy.tonadre@falconjet.com)
romy.tonadre@falconjet.com)  

Abstract: The supply chain performance depends on accurate demand forecasting. This becomes more
critical when
Abstract:
Abstract: The
Theit supply
comes chain
supply chain performance
to non-contract
performance sparedepends on
on accurate
parts service
depends supply
accurate demand
chains.forecasting.
demand This is because
forecasting. This
This of becomes
the factmore
becomes that
more
critical
customers when are it comes
not to
obliged non-contract
to place anspare
order parts
for service
the supply
required chains.
spare
critical when it comes to non-contract spare parts service supply chains. This is because of the fact that This
parts tois because
its Originalof the fact
Equipment that
customers
Manufacturer
customers are
are(OEMnot
not obliged
) due to the
obliged to
to place an
an order
availability
place for
for the
of multiple
order required
the suppliers.
required The spare parts
parts to
sparebusiness its
its Original
toaircraft spare parts
Original Equipment
supply
Equipment
Manufacturer (OEM) due to the availability of multiple suppliers. The business aircraft spare parts supply
Manufacturer
chains are the ( ones
OEM ) due
most to the
affected availability
by this of multiple
phenomenon suppliers.
because The
their business
travel aircraft
pattern andspare parts
usage is totally
supply
chains
chains are the ones most affected by this phenomenon because their travel pattern and usage is totally
are
unpredictable the inones most
comparison affected
with by this
passenger phenomenon
airline because
carriers. their
These travel
highly pattern
uncertain andand usage is
unpredictable
totally
unpredictable
demands
unpredictable and in comparison
insubsequent with
with passenger
comparison inaccurate passenger airline
forecasts
airlinehavecarriers.
carriers. These
severe
These highly
highly uncertain
financial consequences.
uncertain and
and unpredictable
It is also
unpredictable
demands
demands and
computationally and subsequent
expensive toinaccurate
subsequent predict demand
inaccurate forecasts
forecast
forecasts have
have severe
for each
severepartfinancial
due to huge
financial consequences.
number of spare
consequences. It
It is parts
is also
in
also
computationally
computationally expensive to predict demand forecast for each part due to huge number of spare parts in
business aircraft's expensive
supply to
chain.predict
Hence, demand
in thisforecast
paper for
the each part
objective due
is to to huge
investigate number of
forecastingspare parts
methods, in
business
their
business aircraft's
variants supply
supply chain.
and artificial
aircraft's Hence,
intelligence
chain. Hence, (AI) in
in this paper
paper the
methods,
this objective
developed
the objectivefor is to
to investigate
is irregular
investigatedemands,forecasting
to propose
forecasting methods,
best
methods,
their
their variants
method variantand
variants thatartificial
and is capable
artificial intelligence
of accurately
intelligence (AI) methods,
methods, developed
(AI)forecasting for
for irregular
not only uncertain
developed demands,
demands, to
but unpredictable
irregular to propose
demand best
propose e.g.
best
method
method variant that is capable of accurately forecasting not only uncertain but unpredictable demand e.g.
business variant
aircraft'sthat is
spare capable
parts of
supply accurately
chain. forecasting
We retained not
Boot only uncertain
Strapping (BS)but unpredictable
method as the demand
most suitable
e.g.
business
base method
business aircraft's spare
spare parts
for uncertain
aircraft's andsupply
parts chain.
chain. We
unpredictable
supply We retained
demand
retained Boot
Boot Strapping
forecasting. This is(BS)
Strapping because
(BS) method
method of itsas the
the most
asinherent suitable
mostability
suitable to
base
base method for uncertain and unpredictable demand forecasting. This is because of its inherent ability to
reduce method
error for
due uncertain
to resamplingand unpredictable
with demand
replacement. The forecasting.
point and This
intervalis because
(existing), of its
andinherent
sliding ability
window to
reduce
(proposed)
reduce error
errorBS due to
to resampling
duemethods with
with replacement.
are implemented
resampling in Matlab
replacement. The
The andpoint and
andofinterval
results
point demand
interval (existing),
forecastsand
(existing), are sliding
and compared
sliding window
windowwith
(proposed)
the forecasts
(proposed) BS methods
BSgenerated
methods from are
are implemented
benchmarked
implemented in Matlab
Matlab and
in existing results
results of
forecasting
and demand
methods
of demandas: forecasts
Croston,are
forecasts compared
areCroston
compared with
variants
with
the
(SBJ, forecasts
SNB, generated
TSB), from
moving benchmarked
average (MA), existing
single forecasting
exponential
the forecasts generated from benchmarked existing forecasting methods as: Croston, Croston variantsmethods
smoothening as: Croston,
(SES) Croston
and variants
Commercial
(SBJ,
(SBJ, SNB,
(proprietary
SNB, blackTSB),
TSB),box) moving
methods.
moving average
average The (MA),
data used
(MA), single
single exponential
in this smoothening
study is collected
exponential smoothening from(SES) Dassault
(SES) and Commercial
andAviation.
Commercial The
(proprietary
(proprietary black box) methods. The data used in this study is collected from Dassault Aviation. The
results black
demonstrate box)
that methods.
proposed The
sliding data used
windows inBSthis study
variant is
with collected
'Mean' from
function Dassault
outperformedAviation. 75% of
The
results
results demonstrate that proposed sliding windows BS variant with 'Mean' function outperformed 75% of
the spare demonstrate
parts with that proposed
significant sliding
financial windows
gains in BS
terms variant
of with
inventory 'Mean'
holding function
and outperformed
shortage costs. 75% of
the spare parts with significant financial gains in terms of
of inventory holding and shortage costs.
©
the 2017,
spareIFAC
Keywords: parts (International
Spare with significant
parts supply Federation
financial
chains, ofgains
Automatic
Demand Control)
inforecasting,
terms Hosting
inventory
Boot by Elsevier
holding
Strapping, andLtd.
Business All
shortage rights
costs.
Aircraft's reserved.
industry
Keywords: Spare
Keywords: Spare parts
parts supply
supply chains,
chains, Demand
Demand forecasting,
forecasting, Boot Boot Strapping,
Strapping, Business
Business Aircraft's
Aircraft's industry
industry
1. INTRODUCTION This has become more critical with spare parts service supply
1. This
This has become more critical with spare parts
chains. has become
The more
aircrafts critical
spare with
parts spare
supply parts service
chains, supply
in particular
1. INTRODUCTION
The supply chain performance INTRODUCTION depends on accurate demand chains. business The aircrafts
aircrafts, are spare
affected partsby supply
this chains,
phenomena
service
in
supply
particular
because of
chains. The aircrafts spare parts supply chains, in particular
The supply
forecasting chain
(Chopra performance
& Meindl, depends
2007) andon accurate
form the demand
basis of business
the absenceaircrafts,
of are
aircraft affected
travel by this
patterns, phenomena
usages, because
unpredictable of
The supply chain performance depends on accurate demand business aircrafts, are affected by this phenomena because of
forecasting
supply chain(Chopra
planning & Meindl, 2007)
(Bartezzaghi, and form
Verganti, the
& basis
Zotteri, of the absence
location of of
the aircraft
aircrafts travel
and patterns,
that spare usages,
parts are unpredictable
specific and
forecasting (Chopra & Meindl, 2007) and form the basis of the absence of aircraft travel patterns, usages, unpredictable
supply
1999). chain planning (Bartezzaghi, Verganti, is an& Zotteri, location of the aircrafts
non-interchangeable thatand thataspare
causes great parts
risk of areobsolescence.
specific and
supply Thechainspare parts demand
planning management
(Bartezzaghi, Verganti, &important
Zotteri, location of the aircrafts and that spare parts are specific and
1999).
aspect The
for spare parts
manufacturing demand
and management
supply chains. is an
Moreover,important
their non-interchangeable
These are critical that
because causes
of highera great
stock risk
out of obsolescence.
costs due to the
1999). The spare parts demand management is an important non-interchangeable that causes a great risk of obsolescence.
aspect for
forecasting manufacturing
methods, and
inventory supply
control chains.
and Moreover,
determination theirof These
value are
of critical
items; andbecause
becomes of higher
even stock
more out
complex costs fordue to the
business
aspect for manufacturing and supply chains. Moreover, their These are critical because of higher stock out costs due to the
forecasting
best methods,
availability inventory
level, are control
the most and determination
difficult problems of value
aircraft of items;
as demandsand becomes
are more even more
intermittent, complexsporadic for business
and not
forecasting methods, inventory control and determination of value of items; and becomes even more complex for business
best
(Boylanavailability
& Syntetos, level,
2009) .
are the
Spare most
parts difficult
inventories problems
must be aircraft
very highas demands
(Willemain, are more
Smart, &intermittent,
Schwarz, sporadic
2004). It isand not
further
best availability level, are the most difficult problems aircraft as demands are more intermittent, sporadic and not
(Boylan
made & Syntetos,
available at 2009)
appropriate . Spare
points parts
within inventories
the supply must
chain,be very high
complicated (Willemain,
by contract Smart,
and & Schwarz,
non-contract 2004).
business It is further
strategies
(Boylan & Syntetos, 2009). Spare parts inventories must be very high (Willemain, Smart, & Schwarz, 2004). It is further
made available at complicated
as customers by arecontract
not obliged and tonon-contract
place ordersbusiness to OEMstrategies
because
to provide
made available at appropriate
after-sales services points
appropriate and to within
points guarantee
within the
the supply chain,
target service
supply chain, complicated by contract and non-contract business strategies
to provide
levels. after-sales
However, there services
are and
several to guarantee
aspects thattarget
make service
spare as
of customers
the presence are not
of obliged
multiple to place
suppliers, orders
varying to OEM
costs because
and lead
to provide after-sales services and to guarantee target service as customers are not obliged to place orders to OEM because
levels.
parts However,
demand and there are
inventory several
management aspects a that
complex make spare
task as: of the
times. presence
Hence, of multiple
inaccurate suppliers,
demand varying
forecasting costs
could and
resultlead
in
levels. However, there are several aspects that make spare of the presence of multiple suppliers, varying costs and lead
parts
high demand
number and
of inventory
managed management
parts; presence aofcomplex task
intermittent as:
or times.
severe Hence,
financial inaccurate
consequences demand for forecasting
spare parts could
supply result
chainsin
parts demand and inventory management a complex task as: times. Hence, inaccurate demand forecasting could result in
high
lumpy number
demand of managed
pattern; highparts; presence
responsiveness of intermittent
required due or
to severe
of financial
business consequences
aircrafts. for spare parts supply chains
high number of managed parts; presence of intermittent or severe financial consequences for spare parts supply chains
lumpy of
of business
aircraft’saircrafts.
lumpy demand
downtime cost for
demand pattern;
pattern; high
high responsiveness
customers; and risk of stock
responsiveness required due
due to
obsolescence.
required to As business spare parts demand are of intermittent, sporadic
aircrafts.
downtime
This is cost
because for
thecustomers;
fast moving and risk
parts of
may stocknot obsolescence.
need
downtime cost for customers; and risk of stock obsolescence. As aircraft’s sparead-hoc As aircraft’s parts demand are
This is because the fast moving parts may not need ad-hoc
and lumpy nature
spare (i.e.
partsdemand
demandarrivesare ofof intermittent,
infrequently);sporadic
intermittent, hence,
sporadic
forecasting (Romeijnders, Teunter, & Jaarsveld, 2012) but a
This is because the fast moving parts may not need ad-hoc and lumpy nature (i.e. demand arrives infrequently); hence,
and lumpy
traditional nature
forecasting (i.e. demand
methods arrives
(moving infrequently);
average, exponential
forecasting (Romeijnders, hence,
large number
forecasting of spare parts,Teunter,
(Romeijnders, Teunter, &
& Jaarsveld,
due to their intermittent
Jaarsveld, 2012)
2012) but
but aa traditional
or lumpy smoothening forecasting
etc.) andmethodsinventory (moving
controlaverage,
approaches exponential
(ABC
large number of spare parts, due to their intermittent or lumpy traditional forecasting methods (moving average, exponential
nature, require special attention. The spare parts also have
large number of spare parts, due to their intermittent or lumpy smoothening etc.) and inventory control approaches (ABC
smoothening
classification, etc.)
economicand inventory
order control
quantity, stillapproaches
order up to level
(ABC
nature,
nature, require
complex technicalspecial attention.
contents and high The spare
The unit
sparevalue parts also
also have
parts(Boylan & classification,
complex
require special attention. have classification, economic order quantity, still order up to level
etc.) are not economic
appropriate order
for all quantity,
spare still
parts. order
This raisesup to
the risk
level
Syntetos, technical
2009) thatcontents and
and high
require significant high unit value
financial (Boylan
(Boylan &
valueinvestments. & etc.)
complex
Syntetos,
technical
2009) that
contents
require significant
unit
financial investments. etc.) are not appropriate for all spare parts. This raises the risk
of are not
accumulating appropriate
large for all
holdings spare
or parts.
obsolete This raises
stock. the
Existing
risk
Syntetos, 2009) that require significant financial investments. of
of accumulating
forecasting
accumulating methods large
large areholdings
categorized
holdings or
or obsolete
into classes
obsolete stock.
stock. forExisting
regular
Existing
forecasting
forecasting methods
methods are are categorized
categorized into into classes
classes for for regular
regular
2405-8963 ©
Copyright © 2017, IFAC (International Federation of Automatic Control)
2017 IFAC 15806Hosting by Elsevier Ltd. All rights reserved.
Peer review under responsibility of International Federation of Automatic Control.
Copyright © 2017 IFAC 15806
10.1016/j.ifacol.2017.08.2379
Copyright © 2017 IFAC 15806
Proceedings of the 20th IFAC World Congress
Toulouse, France, July 9-14, 2017 N. Ahmadi Mobarakeh et al. / IFAC PapersOnLine 50-1 (2017) 15241–15246
15242
and irregular demands. However, there exist a third class that
is primarily focused on the uncertain demands i.e. artificial
intelligence (AI) based methods. Spare parts supply chains of
business aircrafts in comparison with regular airline carriers
add unpredictability to the demand characteristics that result
in inaccurate demand forecasts. Therefore, it is important to
develop accurate forecasting methods for the aircraft industry
and particularly for business aircrafts. Besides, computational
complexity and costs are not trivial to handle. This is because
of huge number of spare parts; therefore, it is not practical to
forecast each part. There do exist qualitative and quantitative
demand classifications which advocate to regroup spare parts
with similar demand characteristics such that focus is to find
accurate forecasting method for each demand class. However,
costs linked to inaccurate forecasting due to classification is
still an open research question.
This paper is organized into 5 sections. The section 2 presents
review on forecasting methods, variants and AI methods for
irregular demands. The objective is to choose the appropriate
method for adaption to address unpredictable and uncertain
spare parts demand. The BS application method along with 3
scenarios as point and interval (existing) and sliding window
(proposed) BS variants are presented in section 3. The section
4 presents 4-steps methodology along with results of the case
study and financial implications. This paper concludes with
discussion in section 5.
2. LITERATURE REVIEW
This section presents state of the art on demand classification
and forecasting methods for irregular demand patterns with
an objective to find an adaptable forecast method to address
unpredictability and uncertainty in the spare parts demand for
business aircrafts supply chains.
2.1. Spare Parts Demand Classification
Spare parts classification has an important operational role
due to its effect on consequent facilitation in decision making
for forecasting and stock control and also makes it possible
for managers to focus their attention on the most important
stock keeping units (SKUs) (Syntetos et al., 2014). Therefore,
parts exhibiting similar characteristics are often grouped into
classes. In past, it was common practice to categorize demand
pattern before, and then select an estimation procedure to
forecast future requirements and manage stocks efficiently. In
this way, the objective of the demand categorization was the
selection of most appropriate forecast methods. Spare parts
classification and demand forecasting is related to stock
control policies. Since the amount of inventories due to slow-
moving parts is generally important (Regattieri et al., 2005);
therefore, even small improvements in the management of
those items may result in substantial cost savings.
Quantitative classification techniques are more adopted in
researches. ABC classification is the most common technique
(Boylan, Syntetos, & Karakostas, 2008).
That is used for single and multi-criteria classification. For
implementing multi-criteria ABC different methods are
proposed: matrix models, weighted linear optimization,
artificial neural networks, weighted Euclidean distances with
15807
quadratic optimization, and fuzzy logic. Except of ABC,
other quantitative techniques are also developed. Sani &
Kingsman (1997) proposed partitioning of demand variance
during lead time. The definition of product-still-in-use
quantity curves and service parts demand curves as inputs for
the spare parts classification are proposed by Yamashina
(1989).
The most widely accepted spare parts demand classification
is of Syntetos, Boylan et al, (2008), based on two-
dimensional matrix using average inter-demand interval
(ADI) and coefficient of demand variation (CV2). The ADI is
average interval between two arriving demand of the spare
part and is usually expressed in periods, where period is
referential time interval used by the businesses for purchase.
The demand patterns are categorize by comparing potential
forecasting methods and establishing regions of superior
performance. These regions are found as intermittent,
smooth, erratic and lumpy with cutoff values of CV=0.49 and
ADI=1.32. The smooth (slow moving) demand has great
variation in inter-demand intervals and quantities whereas
erratic demand exhibits highly variable quantity with low
inter-demand intervals. In comparison, the intermittent is
without extreme variations in quantity but with many periods
having no demand. The lumpy demand types exhibits large
differences in demand quantity between each period and a
large number of periods having zero demands.
2.2. Forecasting methods for spare parts and demand classes
Having accurate estimation of future demands is a key issue
in production planning and inventory management of spare
parts. The attempts done by the manufacturing sector for
managing spare parts demand uncertainty led to the
development of many forecasting methods and techniques.
Decision makers for several decades in forecasting spare
parts demand have used classical statistical methods, such as
exponential smoothing and regression analysis. In addition to
approaches like forecasting that is an uncertainty reduction
approach, for controlling demand uncertainty in
manufacturing planning and control systems other
approaches like adding redundant spare parts as an
uncertainty management approach have also been devised
(Bartezzaghi et al., 1999). When CV is low these uncertainty
reduction or management methods may perform better but
when demand for an item is lumpy or intermittent these
perform poor (Gutierrez et al, 2008).
Between other products automotive industry (Syntetos and
Boylan, 2001), telecommunication systems (Bartezzaghi et
al., 1999), durable goods spare parts (Kalchschmidt et al.,
2003) and aircraft maintenance service parts (Ghobbar and
Friend, 2003) have lumpy demand.
Ghobbar and Friend (2003) evaluated forecast methods for
intermittent demand of aircraft’s spare parts. They compared
and evaluated additive winter, multiplicative winter, seasonal
regression model, weighted regression demand forecasters,
Croston, exponentially weighted moving average, weighted
moving average, single and double exponential smoothing,
trend adjusted exponential smoothing and adoptive response
 Proceedings of the 20th IFAC World Congress
Toulouse, France, July 9-14, 2017 N. Ahmadi Mobarakeh et al. / IFAC PapersOnLine 50-1 (2017) 15241–15246 15243
rate single exponential smoothing. Their results suggested
that exponential smoothing and Croston forecasting methods
outperformed forecasting methods for intermittent demand.
Another strategy to treat with intermittent demand pattern is
aggregating demand in lower-frequency time intervals and in
subsequently decreasing zero observations (Syntetos et al.,
2015). Although spare parts management has a key and
challenging role in durable goods industry but there is not a
comprehensive attention to this issue in research and business
communities. On the other hand, Syntetos and Boylan (2001)
reported an error in Croston’s mathematical derivation of
expected demand and proposed modification as the Syntetos-
Boylan approximation (SBA) which yields an approximately
unbiased estimator.
Nonlinearity in data pattern may be sometimes not
recognized in traditional time series methods. This issue can
be covered by methods like artificial neural network (ANN).
Indeed Neural network (NN) models can generate appropriate
approximations for any functional relationships. This method
was applied successfully in early researches in the 1980s
(Gutierrez et al., 2008). Also functional form ofindependent
and dependent variables can be misjudged in traditional
statistical time-series methods. This problem can not be
modified along with modelling process and so the needed
data transformations can fail (Chopra & Meindl, 2007).
Bootstrapping is a data driven statistical approach based on
simulation and resampling with replacement (Efron &
Tibshirani, 1994). This method was initially proposed by
Efron (1993) and since then several extensions have appeared
in literature. There exist two ways to get bootstrap estimates.
One is nonparametric which is empirical distribution function
(EDF), established for the random variables. In this method,
observed data is allocated a probability of 1/n to all observed
data points. The other is parametric in which it is assumed
that randome variable has a specific cumulative distribution
function (CDF). Principaly, BS method estimates population
statistics by using available sample statistics. The accuracy of
thses statistics depends on the completeness of sample size;
hence, BS generates multiple samples from existing sample,
i.e. resampling with replacement, to more accurately estimate
taregt statistics by reducing error. Such estimates are referred
as point estimates. In large samples we can use the bootstrap
standard error, along with normal distribution, to produce a
100(1 − a)% confidence interval for θ based on the estimator
θ’ where zα/2 is standard normal value with probability α/2 to
the right:
 '    z /2 SE *( *)
Moreover, having produced r bootstrap replicates θ’∗ b of an
estimator θ, bootstrap standard error is the standard deviation
of the bootstrap replicates:
r
SE *( *)   b 1
( *b  *) 2 / (r  1)
where θ ∗ is the mean of the θ ∗ b. In large samples, where
we can rely on the normality of θ, a 95% confidence interval
for θ is given by θ ± 1.96 SE∗ (θ ∗).
15808
The applications of BS can be mostly found in economic and
finance; however, there do exist initiatives to benefit BS by
mixing AI and other methods. For example, in the application
of flood forecasting hybrid wavelet–bootstrap–ANN
(WBANN) model was proposed by Tiwari & Chatterjee
(2010) to explore the potential of wavelet and bootstrapping
techniques for developing ANN model as an accurate and
reliable one for hourly flood forecasting. Tiwari and
Chatterjee found that in comparison to the traditional ANN,
BANN and WANN with respect to the selected performance
criteria for 1–10 h lead forecast, the WBANN model is
superior.
Bootstrapping do not necessarily need to follow distributional
assumptions and can provide more accurate inferences when
data are not well behaved or sample size is small. Hence, BS
can be applied to distributions that are difficult to derive,
even asymptotically. These advantages clearly highlights
potential usages of BS in the spare parts demand forecasting
where demand is not only uncertain but also unpredictable.
The main advantage of BS over other data driven AI methods
(e.g. NN) is its ability to reduce erros by resampling with
replacement. The use of BS is demonstrated in forecasting by
Syntetos et al. (2015) and Bacchetti and Saccani (2012) for
durable goods and electronics and jewelery. The demand in
these domains is not comparable to the demand of spare parts
in business jet supply chain. Moreover, added uncertainty and
unpredictable demand highlights BS as the best candidate to
explore its benefits. Hence, we retained BS as target method
for spare parts demand forecasting as well as most frequently
used methods to benchmark its results as: MA, SES, Croston,
Croston variants (Nikolaos, 2014) as SNB (SyntetosBoylan
approximation), TSB (Teunter-Syntetos-Babai), SBJ (Shale-
Boylan-Johnston) and Commercial (blacbox method) used by
the industrial partner. The smmothing constants are
optimized intrinsically (Nicholaos, 2014).
3. BOOTSTRAP APPLICATION SCENARIOS
In this section, we present the procedure adapted to apply BS
to model spare parts demand forecasting and 4 BS scenarios.
3.1. Bootstrap Procedure
The bootstrap procedure, adapted to model unpredictable and
uncertain spare parts demand forecast, is as under:
 Take sample of historical spare parts demand X=(x1, x2,
…, xn)
 From X, resample m other samples to get X1, X2, …, Xm
 Given T as the estimator of θ (average demand), calculate
T for all bootstrap samples to get m estimates of θ.
 From the estimates compute desired value as BS function:
e.g. min, max, mean of T1, … , Tm
 To generate estimate intervals, normal confidence interval
α level is defined on values computed from previous step.
3.2. Experimental scenarios
We consider 3 scenarios (BS variants) for demand estimation
via adapted bootstrapping procedure (section 3.1), as under:
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3.2.1. Point scenario

Start
In this scenarios, demand estimation is an exact point value Step-1
where demand from 36 periods is used as input for bootstrap
and 12 following periods are the testing horizon (Figure 3.1).
Input matrix of Data
Step-2
Step-3
Compare the results of
MSE gathered from
selected BS function in
each scenario with other
existed methods for all
classes

Calculation of ADI and

CV^2 for each SKU

Select the best

Fig. 3.1. Point scenario framework scenario for each
demand class
3.2.2. Sliding window scenario Classification of SKUs
based on Cut-off values
In this scenario, we use adapted bootstrap procedure with 36
periods demand input to estimate 37th period. These 36 period Step-4
slides over horizon to predict subsequent 11 periods (Figure
Calculate inventory related
3.2). Generate BS estimations costs from BS forecasts
via all functions and best-existed method
forecasts in defined
inventory strategies
For a sample of 30

Calculation of MSE Calculate inventory related

costs from BS forecasts and
Fig. 3.2. Sliding window scenario framework best-existed method
forecasts in defined
3.2.2. Interval scenario inventory strategies
For intermittent class
In this scenario, we generate a confidence interval as demand Select the best
estimation for each period. Again the input matrix is the same function for each Matrix of best forecasting
class method and best inventory
as the one used for Point scenario. management strategy fore each
SKU
These scenarios are implemented in Matlab and R; however,
mean, min, max, sum, variance and std. deviation bootstrap
functions for resampling are used for each demand class. The End
results are compared based on the Mean Square Error (MSE) Fig. 4.1. Experimental methodology steps
computed in each class to find the best adapted bootstrap
scenario and the function.

4. PROPOSED 4-STEP METHODOLOGY

The methodology used for the implementation of case study
is presented in Figure 4.1. The step-1 corresponds to the data
pre-processing step where raw data is processed and shaped
prior to its use to implement frequently used forecasting
algorithms (MA, SES, Croston, Crosoton TSB, Croston SBJ
and Croston SNB) in R, and BS scenarios in Matlab. In step-
2, we use pre-processed demand data to compute ADI and
CV2 for the classification of SKU into demand classes and
then best BS functions are identified by comparing forecast Fig. 4.2. Demand classes in the dataset
results based on MSE. In step-3, we use best BS function as To avoid computational complexity due to total 23,646 SKUs
identified in the step-2 are further used to compare results in original dataset, a random sample size of 1000 spare parts
with seven frequent forecasting algorithms followed by is approximated with α=0.05 using:
financial implications.
n  Z /2 2  2 / ( X   ) 2
The data used for the case study is collected from Dassault Moreover, in the selected sample size, representation of all
Aviation, which is aggregated on monthly basis as 48 demand classes is ensured 250 SKU from each class (Figure
periods. The 36 periods are used as input whereas 12 periods 4.2). The results of best BS function in all three scenarios
for demand forecast. The demand classes computed using from 1000 sampled parts is presented in Figure 4.3. The
ADI and CV2 are presented below in the Figure 4.2. results are presented for intermittent demand class; but due to
space constraints similar analysis results are presented for
smooth, erratic and lumpy demand.

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FUNCTION Best Best% Worst Worst% is presented in Figure 4.5. The results for other demand
MEAN 843 93.36% 0 0.00%
MIN 60 6.64% 0 0.00%
classes. In these results, BS refers to the best BS function
MAX 0 0.00% 0 0.00% based computation of total costs (sum of inventory holding
SUM 0 0.00% 991 99.10% and shortage) sosts. The ‘E” refers to existing methods. The
SD 0 0.00% 0 0.00%
VAR 0 0.00% 9 0.90%
positive values represents savings whereas negative values
FUNCTION Best Best% Worst Worst%
are the added costs due to the preference of best BS function
MEAN 684 68.40% 0 0.00% over existing methods. Moreover, S1 to S7 refers to shortage
MIN 60 6.00% 0 0.00% and inventory holding costs strategies (Table 4.1). The
MAX 2 0.20% 0 0.00%
SUM 0 0.00% 985 98.50%
undersocking cost is atleast equal or more than the
SD 157 15.70% 0 0.00% overstocking cost. Consequently, costs are computed
VAR 97 9.70% 15 1.50% cosnidering respective parts listed unit price.
FUNCTION Best Best% Worst Worst%
MEAN 15 1.70% 0 0.00%
Table 4.1 Defined inventory policies
MIN 804 90.95% 0 0.00%
MAX 65 7.35% 1 0.10%
SUM 0 0.00% 982 98.20%
SD 0 0.00% 0 0.00%
VAR 0 0.00% 17 1.70%
Fig. 4.3. Bootstrap functions ranking percentage for
intermittent class
After having found best BS functions in each demand class
and scenario, the respective demand forecasts for all sampled
parts are compared with the demand forecasts computed from
retained forecast algorithms, Croston, Croston TSB, Croston
SBJ, Croston SNB, MA, SES and 1Commercial methods. The
results for three scenarios (Sc1: point, Sc2: interval, Sc3
window), for intermittent class are shown in Figure 4.4.
Sc1
Method Best Best%
Croston.MSE 43 4.30%
CrostonSNB.MSE 45 4.50%
MA.MSE 120 12.00%
CrostonSBJ.MSE 39 3.90%
CrostonTSB.MSE 77 7.70%
SES.MSE 71 7.10%
MCA.MSE 492 49.20%
Point 113 11.30%
Sc2
Method Best Best%
Croston.MSE 6 0.60%
CrostonSNB.MSE 8 0.80%
MA.MSE 24 2.40%
CrostonSBJ.MSE 8 0.80%
CrostonTSB.MSE 17 1.70%
SES.MSE 26 2.60%
MCA.MSE 75 7.50%
Sliding window 836 83.60%
Sc3
Method Best Best%
Croston.MSE 2 0.20%
CrostonSNB.MSE 2 0.20%
MA.MSE 2 0.20%
CrostonSBJ.MSE 1 0.10%
CrostonTSB.MSE 2 0.20% Fig. 4.5. Inventory strategies total cost
SES.MSE 1 0.10%
MCA.MSE 1 0.10% 5. CONCLUSIONS
interval 989 98.90%
Fig. 4.4. Best method ranking percentages for intermittent class The results conclude that 'mean' is the best BS function for
The computation of financial impact is not trivial; hence, we point and sliding window scenarios, however, 'min' function
simplified it with the hypothesis that inventory shortage costs performs better for some case in interval scenario but 'mean'
are either equal or mor ethan inventory holding costs. Seven performs better in most of the cases. When demand forecasts
strategies are tested by varying inventory holding cost from by BS are compared with those by existing methods, sliding
10% to 20% of price and shortage costs upto 40%, window and interval scenario performs better than others for
respectively. The financial impact for intermittent class is majority of the spare parts. Reason for the success of interval
computed for BS and existing functions over 7 cost strategies based scenario is the length of interval itself which reduces
the MSE to its minimum level. Besides the fact that it results
in least MSE, the forecasts cannot be easily transferred into
1 inventory related decision. Therefore, we conclude that
This refers to method used by existing material management ERP system
at Dassault Aviation

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sliding window based BS with mean function is reliable and
can be used for subsequent inventory related decision. This
outperforms existing methods for 75% of the spare parts. The
financial impact, computed as shortage and inventory holding
costs, demonstrates that when sliding window BS function is
preferred over existing methods, it results in significant cost
savings in comparison with costs associated with the existing
forecasting methods.
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