Proceedings of the 20th World Congress

Proceedings of the 20th World Congress

The International
Proceedings Federation
of the 20th Worldof Congress
Automatic Control
The International
Proceedings Federation
of the 20th Worldof Congress
Automatic Control
Available online at www.sciencedirect.com
Toulouse,
The France,Federation
International July 9-14, 2017
of Automatic Control
Toulouse, France,Federation
The International July 9-14, 2017
of Automatic Control
Toulouse, France, July 9-14, 2017
Toulouse, France, July 9-14, 2017
ScienceDirect
IFAC PapersOnLine 50-1 (2017) 15221–15226
Demand
Demand Forecasting
Forecasting for
for Irregular
Irregular Demands
Demands in
in Business
Business Aircraft
Aircraft Spare
Spare Parts
Parts
Demand Forecasting
Demand Forecasting
Supply for
for Irregular
Irregular
Chains by Demands
Demands
using in
in
Artificial Business
Business Aircraft
Aircraft
Intelligence (AI) Spare
Spare Parts
Parts
Supply
Supply Chains
Chains by
by using
using Artificial
Artificial Intelligence
Intelligence (AI)
(AI)
Supply Chains by using Artificial Intelligence (AI)
K.
K. Nemati
Nemati Amirkolaii*,
Amirkolaii*, A.
A. Baboli*,
Baboli*, M.
M. K.
K. Shahzad*,
Shahzad*, R.
R. Tonadre**,
Tonadre**, ***
***
** K. Nemati Amirkolaii*, A.
Université
K. Nematide
Université Lyon,
deAmirkolaii*, A. Baboli*,
Lyon, INSA-Lyon,
INSA-Lyon, DISP
Baboli*, M.
M. K.
K. Shahzad*,
DISP Laboratory
Laboratory EA4570, R.
R. Tonadre**,
EA4570, Villeurbanne,
Shahzad*, France
Tonadre**,
Villeurbanne, France
***
***
** * Université
Dassault de Lyon,
Aviation, 7, INSA-Lyon,
rond-point des DISP Laboratory
Champs Elysées EA4570,
Marcel Villeurbanne,
Dassault 75008 France
Paris, France
** Dassault Aviation,
* Université 7, rond-point
de Lyon, des Champs
INSA-Lyon, Elysées Marcel
DISP Laboratory Dassault
EA4570, 75008 Paris,
Villeurbanne, FranceFrance
** Dassault
*** Dassault Aviation,
Falcon 7, Corp.
rond-point des Champs Elysées Marcel Dassault 75008NJ
Paris, France
***
** Dassault Falcon Jet
Dassault Aviation,Jet
7, Corp.
Teterboro
Teterboro
rond-point
Airport, Box
Box 2000,
Airport,Elysées
des Champs 2000, South
South
Marcel
Hackensack,
Hackensack,
Dassault 75008NJ
07606,
07606,
Paris,
USA
USA
France
*** Dassault Falcon Jet Corp.
(nemati_keivan@yahoo.com, Teterboro Airport, Box 2000,
armand.baboli@insa-lyon.fr, South Hackensack, NJ 07606, USA
muhammad-kashif.shahzad@insa-lyon.fr,
(nemati_keivan@yahoo.com, armand.baboli@insa-lyon.fr,
*** Dassault Falcon Jet Corp. muhammad-kashif.shahzad@insa-lyon.fr,
Teterboro Airport, Box 2000, South Hackensack, NJ 07606, USA
(nemati_keivan@yahoo.com,
(nemati_keivan@yahoo.com, armand.baboli@insa-lyon.fr, muhammad-kashif.shahzad@insa-lyon.fr,
romy.tonadre@falconjet.com)
armand.baboli@insa-lyon.fr, muhammad-kashif.shahzad@insa-lyon.fr,
romy.tonadre@falconjet.com)
romy.tonadre@falconjet.com)
romy.tonadre@falconjet.com)

Abstract: Demand
Abstract: Demand forecast
forecast accuracy
accuracy in in the
the service
service supply
supply chains
chains e.g.
e.g. spare
spare parts
parts isis critical
critical for
for customer
customer
Abstract:
satisfaction Demand
and its forecast
financial accuracy
performance. in the service
This is a supply
typical chains
logistic e.g. spare
network parts
which is
is critical
affected for
by customer
irregular
satisfaction and its financial performance. This is a typical logistic network which affectedfor
Abstract: Demand forecast accuracy in the service supply chains e.g. spare parts is critical by customer
irregular
satisfaction
demand and
resulting
satisfaction its financial
from performance.
contract and This
non-contract is a typical
business logistic
strategies.network
Hence, which
existingis affected
forecastingby irregular
methods
demand resulting from contract and non-contract business strategies. Hence, existing forecasting irregular
and its financial performance. This is a typical logistic network which is affected by methods
demand
that work
demand resulting
excellent from
with contract
smooth and
and non-contract
linear demand business
patternsstrategies.
become Hence,
less existing
accurate forecasting
with increasing methods
erratic,
that workresulting
excellent from
withcontract
smoothand andnon-contract
linear demand business
patternsstrategies.
become less Hence, existing
accurate forecasting
with increasingmethods
erratic,
that
lumpywork
and
that work excellent with
intermittent smooth
demands. and linear
Moreover, demand patterns
increasing numberbecome
of less
stock accurate
keeping with
units increasing
(SKUs) in erratic,
service
lumpy andexcellent withdemands.
intermittent smooth and linear demand
Moreover, patterns
increasing numberbecome less keeping
of stock accurateunits
with (SKUs)
increasing erratic,
in service
lumpy
supply and
chains
lumpy and intermittent
have demands.
computational
intermittent Moreover,
limitations.
demands. Moreover, increasing
This is number
because ofofthestock
fact keeping
that demandunits (SKUs)
keep on in service
fluctuating
supply chains have computational limitations.increasing number
This is because ofofthestock keeping
fact that demandunitskeep
(SKUs) in service
on fluctuating
supply
their chains
demand have
have computational
chains classes that limitations. This is
is because
because of of the fact that demand keep on fluctuating
supply
their demand classes that result
result in
computational uncertainty
uncertainty and
in limitations. Thisconsequently,
and consequently, leads
the
leads to
fact higher
to that target
demand
higher targetkeepstock
stockonlevels (TSL)
fluctuating
levels (TSL)
their
and demand
lower
theirlower
demand classes
reorder
classes that
point result
(ROP)
that(ROP)
result toin
to uncertainty
ensure
in ensure higher
uncertainty and consequently,
customer
and leads
satisfaction.
consequently, to
This
leads to higher target
raises
higher stock
interest in levels
using (TSL)
AI for
and reorder point higher customer satisfaction. This raisestarget stock
interest in levels
using AI (TSL)
for
and
and lower
service
lower reorder
supply
reorder point
chains
pointto (ROP)
improve
(ROP) to
to ensure
demand
ensure higher
forecast
higher customer
accuracy.
customer satisfaction.
In this This
paper,
satisfaction. This weraises
present
raises interest
a in
survey
interest in using
of
using AI for
existing
AI for
service supply chains to improve demand forecast accuracy. In this paper, we present a survey of existing
service
service supply
forecasting
supply chains
methods
chains to
used
to improve
in
improve demand
service and
demand forecast
non-service
forecast accuracy.
supply
accuracy. In this
chains
In this paper,
to we
select
paper, we present
best a survey
performing
present a survey AIof
of existing
methods
existing
forecasting methods used in service and non-service supply chains to select best performing AI methods
forecasting
and methods used
used in in service and
and non-service supply chains to
to select best performing AI
AI methods
and performance
forecasting methods
performance measures,
measures, using
using ABC
service ABC classification.
non-service
classification. Neural
supply network
chains
Neural network (NN)
select bestand
(NN) Mean
Mean Square
performing
and Square Error
methods
Error
and
(MSE),performance
are
and performance measures,
subsequently
measures, using
modelled ABC
and
using and
ABC usedclassification.
in aircraft
classification. Neural
spare
Neural network
parts supply (NN)
chain and
using Mean
data Square
Square Error
collected from
(MSE), are subsequently modelled used in aircraft spare partsnetwork (NN) using
supply chain and Meandata collected Error
from
(MSE),
Dassault are
(MSE), are subsequently
Aviation, as
subsequently a modelled
function and
of
modelledofand used
most
used in aircraft
commonly spare
used
in aircraftused parts supply
aggregated
spareaggregated
parts supply chain
demand using data
features.
chain using collected
The
dataThe results
collected from
are
Dassault Aviation, as a function most commonly demand features. resultsfrom
are
Dassault
compared Aviation,
with
Dassault Aviation, as a
frequently function
and
as a function of
best most commonly
performing
of most commonly used
forecast aggregated
methods
usedmethods
aggregated for demand features.
intermittent demand The asresults are
Croston,
compared with frequently and best performing forecast for demand features.
intermittent demand Theasresults are
Croston,
compared
Croston SBJ
comparedSBJ with
withandfrequently
Croston and
TSB; best
and performing
classical forecast
methods as methods
moving for intermittent
average (MA) anddemand
single as Croston,
exponential
Croston andfrequently
Croston TSB; and best performing
and classical forecast
methods as methods for intermittent
moving average (MA) and demand
single as Croston,
exponential
Croston
Croston SBJ
SBJ and
smoothening Croston
(SES). The TSB;
TSB; and classical methods as
as moving average (MA) and single exponential
smoothening and
(SES). The analysis
Croston analysis andand results
andclassical suggest
suggest that
results methods that NN
NN with
movingwith higher
average number
higher(MA)
number andof features
ofsingle improve
exponential
features improve
smoothening
demand
smoothening (SES).
forecast
(SES). The
accuracy
The analysis
analysis and
significantly
and results
for
results suggest
intermittent
suggest that
that NN with
demands
NN with higher
along
higher number
with
number of
reduction
of features
in
features improve
associated
improve
demand forecast accuracy significantly for intermittent demands along with reduction in associated
demand
financial
demand forecast accuracy
implications.
forecast accuracy significantly
significantly for
for intermittent
intermittent demands
demands along
along with
with reduction
reduction in
in associated
associated
financial implications.
financial implications.
© 2017, IFAC
financial (International
implications. Federation ofChains,
Automatic Control) Hosting by Elsevier Ltd. All rightsJetsreserved.
Keywords: Spare
Keywords: Spare Parts
Parts Service
Service Supply
Supply Chains, Demand Demand Forecasting,
Forecasting, AI AI Methods,
Methods, Business
Business Jets
Keywords: Spare Parts Service Supply Chains, Demand Forecasting,
Keywords: Spare Parts Service Supply Chains, Demand Forecasting, AI Methods, Business Jets AI Methods, Business Jets


 comparison
1.  comparison to to passenger
passenger airline
airline carriers.
carriers. This
This results
results in
in more
more
1. INTRODUCTION
INTRODUCTION comparison
fluctuating to passenger
demand patternsairline
wherecarriers. This
forecasts results
are more in more
1. comparison demand
fluctuating to passenger
patternsairline
wherecarriers. This are
forecasts morein likely
results more
likely
1. INTRODUCTION
INTRODUCTION fluctuating
to demand patterns where forecasts are more likely
The to be
be inaccurate
fluctuating demand
inaccurate with
with severe
patterns
severewhereconsequences
forecasts on
consequences arethe
on more
the financial
likely
financial
The biggest
biggest challenge
challenge faced
faced byby today’s
today’s service
service supply
supply chains
chains to be
be inaccurate
performance of with
with severe consequences on
on the
the financial
The
is biggest
increasing challenge
inventory faced by
managementtoday’scostservice
while supply
ensuring chains
high to inaccurate
performance of respective
respective supply
severe
supply chains.
consequences
chains. financial
The
is biggest challenge
increasing inventoryfaced by today’s
management costservice
while supply
ensuring chains
high performance of respective supply chains.
is increasing
customer inventory
satisfaction. management
This is because cost
of while
the factensuring
that high
demand performance of respective supply chains.
is increasing
customer inventoryThis
satisfaction. management
is becausecost while
of the factensuring high
that demand The
customer
patterns satisfaction.
changes as a This is
function because
of of
business the fact
strategy that demand
adapted by The spare
spare parts
parts inin these
these supply
supply chains
chains ranges
ranges from
from 300,000
300,000 to to
customerchanges
satisfaction. This is because of the fact that demand The spare parts in these supply chains ranges from 300,000
patterns
patterns
supply changes
chain
as a function
as aa function
partners. For
of business
of
example,business
spare
strategy
strategy
parts
adapted
adapted
supply chain
by
by 500,000
500,000 SKUs
The spareSKUs which
parts which adds
in theseadds higher
supply chains
higher computational
computational 300,000 to
complexity
ranges fromcomplexity to
patterns changes as function of business strategy
supply chain partners. For example, spare parts supply chain adapted by 500,000
and dire SKUs which adds higher computational complexity
supply
is a
supply chain
typical
chain partners.
logistic
partners. For
network
For example,
with
example, spare
contract
spare parts
and
parts supply chain
non-contract
supply chain and dire need
500,000 SKUsto
need group
towhich
groupadds spare parts,
sparehigher exhibiting
exhibiting similar
parts, computational demand
complexity
similar demand
is a typical logistic network with contract and non-contract and
and dire
dire need
need to
characteristic. group
group spare
Moreover, the parts,
cost exhibiting similar demand
is aa typical logistic network with characteristic. to
Moreover, spare cost and
the parts, and lead
lead time
exhibiting
time of
of these
similar parts
demand
these parts
type
is
type business
typical strategies.
businesslogistic
strategies. In
network with contract
In presence
presence of
contract and
of multiple
multiple
non-contract
and suppliers
non-contract
suppliers and
and characteristic.
can range from Moreover,
few USD the
to cost
hundredsand lead
and time of
thousands these
of parts
USD
type
strictbusiness
quality strategies.
standards, In
the presence
customer of multiple
orders are suppliers
not limited and
to characteristic.
can range fromMoreover,
few USD the cost and lead
to hundreds and time of these
thousands parts
of USD
type
strict quality standards, the customer orders are not limitedand
business strategies. In presence of multiple suppliers to can
with range
lead from
times few
up USD
to 2 to
years.hundreds
The and
inventorythousands
costs of USD
associated
strict
OEM quality
(originalstandards,
equipment the customer
manufacturer). orders are
This not
is limited
because to
one can range
with from few
lead times up toUSD to hundreds
2 years. and thousands
The inventory of USD
costs associated
strict quality
OEM (originalstandards,
equipment themanufacturer).
customer orders areisnot
This limitedone
because to with
to lead times
times up to
to 22 years. The inventory costs associated
OEM
can get(original
the equipment
required part, manufacturer).
compliant to This
quality is because
standards, one
form to these
with leadlogistic
these logistic networks
up
networks are
are in
years. the
inThe billions
billions of
theinventory USD
ofcosts which
which is
USDassociated is
OEM
can get(original equipment
the required manufacturer).
part, compliant Thisstandards,
to quality is becauseform one to these
majorly logistic
met by networks
capital are in
investment. the billions
Hence, of
this USD
give which
huge is
can to these logistic networks are in the billions
majorly met by capital investment. Hence, this give huge of USD whichrise
is
rise
can get
get the
multiple
multiple the required
suppliers
requiredat
suppliers
part, compliant
varying
atpart,
varying costs
costs and
compliant to
to quality
and lead standards,
lead times.
qualitytimes. This form
This often
standards, form
often majorly
of met
interest in by
thecapital investment.
forecasting methods Hence,
for this
spare give
partshuge rise
service
multiple
results insuppliers
more and at varying
more sparecosts
parts and lead
getting times.
into This often
non-contract majorly met by capital investment. Hence, this
of interest in the forecasting methods for spare parts service give huge rise
multipleinsuppliers
more andatmorevarying
sparecosts
partsand lead into
times. This often of
results
results in more
getting non-contract of interest
supply chains
interest
supply chains
in
in the
of
the forecasting
of business
forecasting
business
methods
aircraft
methods
aircraft
for
for spare
industry.
industry. This
This is
spare parts
is
service
because
parts service
because of
of
business
results
business more and
instrategy,
strategy,
more
more spare
andresulting
resulting in parts
parts getting
in competition
sparecompetition
into
gettingover
over
non-contract
intocosts
costs and
and lead
non-contract
lead supply
the factchains
that of
even business
partial aircraft
improvement industry.
in theThis is
demand because
forecastof
business
times. strategy,
Consequently, resulting in
emerging competition
demand over
patternscostsareand lead
highly supply
the factchains
that evenof business aircraft industry.
partial improvement in theThis is because
demand forecastof
business
times. Consequently, emerging demand patterns areand
strategy, resulting in competition over costs lead
highly the fact
accuracy that
can even
resultpartial
in theimprovement
savings of in the
millions demand
of USD forecast
which
times.
uncertainConsequently,
and emerging
unpredictable. demand patterns are highly the fact that
accuracy caneven
resultpartial
in theimprovement in the demand
savings of millions of USDforecast
which
times. Consequently, emerging demand patterns are highly accuracy can result in the
uncertain and unpredictable.
uncertain is beneficial
accuracy
is beneficialcan for both
result
for both the savings
in business
savings
business
of
of millions
aircraft
aircraftmillions of
of USD
manufacturer
manufacturer USDand which
and the
which
the
uncertain andand unpredictable.
unpredictable. is beneficial for both business aircraft manufacturer and
In
shareholders
is beneficial for
shareholders of the
of thebothcompany as it
businessasaircraft
company reduces capital
manufacturer
it reduces and the
investment
capital investment the
In this complex and
this complex and competitive
competitive situation,
situation, spare
spare parts
parts supply
supply shareholders
while of the
the company as it
it reduces
reduces capital investment
In this
chains complex
can reduce and competitive
inventory cost, situation,
target stockspare
level parts supply
(TSL) and while ensuring
shareholders
ensuring ofhigher
higher customer
company
customer assatisfaction
satisfaction levels.
capital
levels. investment
In this can
complex
reduceand competitive
cost, situation, spare parts supply while
chains
chains
improve can reduce
reorder
inventory
inventory
point (ROP) cost,
target stock
target
while stock
ensuring
level
level
(TSL)
(TSL)
minimum
and
and
lead while ensuring
ensuring higher
higher customer
customer satisfaction
satisfaction levels.
levels.
chains canreorder
improve reducepoint
inventory
(ROP) cost, target
while stock level
ensuring (TSL)lead
minimum and In
improve
times to reorder
the point
customers (ROP)
if and while
only if ensuring
they can minimum
predict lead
demand In this paper, we focus on spare parts service supply
this paper, we focus on spare parts service supply chain
chain ofof
improve reorder point if(ROP) while ensuring minimum lead In this paper, we focus on spare parts service supply chain
times
times
to the customers and only if they can predict demand business
In this aircraft
paper, we manufacturers
focus on spare to find
parts best
service
business aircraft manufacturers to find best forecast methodsforecast
supply chain of
methods of
times to
forecast the
the customers
to more accurately.
customers if
if and
This
and only if
if they
becomes
Thisonly
can
can predict
theymore demand
challenging
predict demand for business aircraft manufacturers to find
forecast
forecast
business
more
more
accurately.
accurately.
aircraft This
manufacturers
becomes
becomes
supply
more
more
chains
challenging
challenging
of spare
for
for
parts
for
for either
business each
each or
eitheraircraft group
group of of parts
ormanufacturers parts find best
best forecast
to exhibiting
exhibiting similar
forecast methods
demand
similar methods
demand
forecast more accurately. This becomes more challenging for for
business aircraft manufacturers supply chains of spare parts
business
because aircraft manufacturers supply chains of spare parts for either
either each
characteristics
eachfor
characteristics
or
for
group
group of
or competitiveof parts
competitive parts exhibiting
advantage. We
exhibiting
advantage.
similar
present
Wesimilar
demand
survey
presentdemand
survey
because aircraft’s travel pattern and usage is unpredictable in
business aircraft’s
aircraft travel pattern
manufacturers and
supplyusage is
chains unpredictable
of spare parts
in characteristics
of existing
characteristicsmost for competitive
frequent advantage.
forecasting We
methods present
for survey
service and
because of existing mostforfrequent
competitive advantage.
forecasting We for
methods present survey
service and
because aircraft’s
aircraft’s travel
travel pattern
pattern and
and usage
usage is
is unpredictable
unpredictable in in of
of existing most frequent forecasting methods for service and
existing most frequent forecasting methods for service and
2405-8963 © 2017,
Copyright 2017 IFAC 15786
IFAC (International Federation of Automatic Control) Hosting by Elsevier Ltd. All rights reserved.
Copyright ©© 2017 IFAC 15786
Peer review©under
Copyright 2017 responsibility
IFAC of International Federation of Automatic
15786Control.
Copyright © 2017 IFAC
10.1016/j.ifacol.2017.08.2371 15786
Proceedings of the 20th IFAC World Congress
15222
Toulouse, France, July 9-14, 2017 K. Nemati Amirkolaii et al. / IFAC PapersOnLine 50-1 (2017) 15221–15226
non-service supply chains to identify the best AI methods and
performance measures using ABC classification. The NN and
MSE are found as the best AI method and accuracy measure.
These are used in a case study based on spare parts demand
data, collected from Dassault Aviation, as a function of
commonly and frequently used aggregated demand features.
Moreover, forecast accuracy is compared with most
frequently and best performing forecast methods for
uncertain and unpredictable demand as: Croston, Croston
SNB (Syntetos-Boylan approximation), Croston TSB
(Teunter -Syntetos-Babai) and Croston SBJ (Shale-Boylan-
Johnston); and classical methods as Moving Average (MA)
and Single Exponential Smoothening (SES). The analysis and
results suggest that NN with higher number of features do
improve demand forecast accuracy of uncertain and
unpredictable demands along with reduction in associated
financial implications, significantly.
2. LITERATURE REVIEW
This section presents a brief review on demand classification
techniques; and most frequently and best performing forecast
methods, measures of accuracy and input features from non-
spare and spare parts service supply chain studies. Moreover,
we also present ABC classification technique used to retain
best performing and likely most adaptable forecast methods
and performance measures. These are then modelled and used
with other forecast methods as a function of number of input
features for their best adaption in business aircraft spare parts
supply chain. The case study and results are presented in next
section.
2.1 Spare parts and demand classification
In this section, spare parts demand characteristics of business
aircraft and airline careers are compared to distinguish the
challenges faced by respective spare parts logistic networks.
Moreover, due to high number of spare parts in these supply
chains, it is highly important to analyze and choose existing
methods to classify the demand patterns. Hence, we present
and choose demand classification method for grouping of the
spare parts in the case study.
The spare parts demand of airline carrier is more regular and
predictable than business jets because their usages and travel
patterns are available to estimate the need of respective spare
parts. Whereas, it is not the case with business aircrafts due to
their unpredictable usages and flight patterns, primarily based
on their leisure usage and confidentiality. Hence, this is not
easy to predict which business aircraft might need which part
at which location. Another big difference between these two
aircrafts’ spare parts is interchangeability. The airliners have
higher number of interchangeable parts than business aircraft
because later are designed for special and specific functions.
Besides, there are significant variations in price and demand
volume. However, both types of aircrafts share varying prices
and lead times.
The computational cost and complexity associated with the
forecast of each part in the service supply chain is practically
15787
not feasible. Therefore, classification is used to group these
parts based on similar demand characteristics to have better
and more accurate demand forecasts for subsequent optimal
inventory related decisions. Eaves and Kingsman (2004)
proposed loose classification of demands as the function of
demand and quantity variations (Table 1). (Syntetos, Boylan,
and Croston, 2004) quantified this conceptual classification
and proposed experimental cutoff values for coefficient of
variation (CV2=0.49) as representative of quantity variation
and average demand interval (ADI=1.32) as representative of
demand variations. In the next section, we focus on irregular
demand forecasting methods due to space restrictions.
Table 1. Four considered demand type and variability
representation
Variability
Demand Inter-
Type Demand Quantity
Intervals
Smooth LOW
LOW
Erratic HIGH
Intermittent LOW
HIGH
Lumpy HIGH
2.2 Frequently used Forecasting Methods, Accuracy
Measures and Demand Features
The traditional forecasting methods have focused on regular
demand patterns; however, Croston (1972) was the first who
presented an exponential smoothing method for the irregular
demand forecast in inventory control system. He concluded
that intermittent demand could lead to improper stock levels
and suggested to use separate estimates of demand size and
interval between consecutive demand occurrences. Syntetos
(2001) reassessed Croston’s method with focus on its forecast
performance and presented modification with approximately
unbiased demand/period estimates and showed superiority of
the revised method. Syntetos, Babai, and Gardner (2015)
investigated that simple parametric or bootstrapping method
is more appropriate to forecast demand mean and variance for
intermittent demand class. The results confirmed the suitable
performance of the former and questioned the benefit of latter
relative to its complexity. These extensions are referred as
Croston SNB, Croston TSB and Croston SBJ methods
(Kourentzes, 2014).
Amin-Naseri and Tabar (2008) have employed recurrent NN,
multi-layered perceptron NN and generalized regression NN
for forecasting spare parts from lumpy demand class. They
used real data gathered to examine the forecasting
performance of proposed approaches by comparing it to
Croston’s and Syntetos and Boylan approximation methods.
The results confirmed the superiority of the AI based NN
methods.
Forecasting demand for spare parts and aircraft spare parts in
particular have been widely investigated in the literature
(Ghobbar and Friend, 2003; Hua and Zhang, 2006; Chen and
Chen, 2009; Muñoz and Muñoz, 2011). Ghobbar and Friend
(2002) focused on sporadic nature of demand for aircraft
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maintenance repair parts and explored the sources of demand separating last two nonzero demand transactions and price as
lumpiness in an attempt to reduce the level of lumpiness of target input features to be used in the case study (see section
the demand as well as to select proper forecasting method. 3 and 4).
They used statistical analysis to examine experimental results
of demand lumpiness, measured by the square coefficient of
variation and the average inter-demand interval. Furthermore,
taking advantage of condition-monitoring components real
data from an airline operator, they demonstrated that aircraft
utilization rate and flying hours could be major sources of
lumpiness.

Regattieri, Gamberini, and Manzini (2005) investigated the

behavior of 20 forecasting methods when dealing with lumpy
demand class for high priced parts, such as aircraft spare
parts, using historical data from Alitalia. The results showed
that the best approaches in terms of accuracy are weighted
moving averages, exponentially weighted moving average
and Croston methods. Romeijnders, Teunter, and Jaarsveld
(2012) developed a two-step forecasting method that, besides Fig. 1. ABC classification and final merged ranking of NN
the demand, took into account the number of parts needed per methods
repair and the number of repairs for each type of component.
This was implemented in the aviation industry and results
confirmed the accuracy of proposed approach, and indicated
that, contrary to other methods, it could use information on
repair operations and planned maintenance to mitigate
forecasts errors by up to 20%.

More than 60 articles on spare and non-spare parts demand

forecasting are reviewed and three lists of best performing
and frequently used forecast methods, accuracy measures and
input features are compiled. These are prepared with weights
on the relevance of elements (method, measure, feature) with
spare parts supply chain and their frequency (Table 2). The
scope of the forecast methods is restricted to NN because of
their inherent ability to perform better on unpredictable and Fig. 2. ABC classification and final merged ranking of PM
uncertain demand patterns.
3. CASE STUDY AND SIMULATION SCENARIOS
Table 2. Working process for the merged lists of forecast
methods, accuracy measures and input features The data used in case study is collected from Dassault
Aviation comprising of 23,646 SKU from 22 locations.
NN Spare None- Merge SP Moreover, SKU are further computed into different classes as
3 FINAL
Methods Parts Spare and NSP CV2=0.49 and ADI=1.32 cutoff values and found 15,402
MERGED
Performance Case Parts categories SKU (65%) intermittent, 7,253 SKU (31%) lumpy, 516 SKU
LIST
Measures Case for each (2%) erratic and 474 SKU (2%) smooth. The demand data
(NN-PM-
Input of this 3 spans from 2012 till 2015 and is aggregated on monthly basis
IF)
Features element which resulted into 48 periods. The prediction horizon is kept
The choice of selected forecast methods, accuracy measure to 1 period. Consequently, we had 12 sliding windows of 36
and input features is subjected to ABC classification with periods each to predict last 12 periods from total of 48
Gini Coefficient (GC) = 18.5/27.5  0.6727 as: class periods dataset.
A=20%, B=30% and C=50%. The results (Figure 1) shows
Multi-Layer Perceptron (MLP) and Generalized Recurrent Using our classification of NN methods Figure 1, and limited
Neural Network (GRNN) as class A forecast methods for the time and space, we firstly used MLP-NN with back
spare-part supply chain networks. For accuracy measures, we propagation (BP) algorithm and MSE, ranked 1 and 3 in the
found Mean Absolute Percentage Error (MAPE), Percentage merged lists from class A, as our target forecast and accuracy
Best (PB), Mean Squared Error (MSE) and Adjusted- Mean methods whereas all 16 features from class A are used to
Absolute Percentage Error (A-MAPE) as class A measures generate different scenario. Further, to avoid computational
(Figure 2). According to Class A for the input features, we complexity, we took a random sample of 30 SKU from the
have retained: mean, min and max (4, 6, 8 periods), sum, dataset, across 4 demand classes, according to their relative
standard deviation, ADI, CV2, demand at the end of weighed representation in total dataset. As the key focus of
immediately preceding target period, number of periods this paper is to identify the best AI forecast methods for spare

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parts supply chain in business jet manufacturing industry, 4
scenarios are developed as the input function of number of
demand features as under:
1. M-S1: 1 input demand feature with 1 SKU
2. M-S2: 1 input demand feature with all SKUs
The results of one part for demand and MSE are graphically
presented in Figures 3 and 4 over 12 periods horizon used for
forecasting (last 12 periods from 37 till 48), respectively. In
Figure 4, actual demand is included for visual comparison.
Moreover, we removed results from worst scenarios M-S2
and M-S4. The Figure 5 presents MSE results for all sampled
30 parts.

3. M-S3: 16 input demand feature with 1 SKU

4. M-S4: 16 input demand feature with all SKUs

The MLP-NN with back propagation over these 4 scenarios

was developed and implemented in Matlab whereas
benchmarked forecast methods as: MA, SES, Croston,
Croston SBJ, Croston TSB, Croston SNB are implemented in
R to compare performance using MSE. Besides the
benchmarked methods, we included in the comparison
forecast results from heuristic forecast method of a software, Fig. 3. Detailed comparison of MSE of PART1 from all
used by our industrial partner. methods for 12 period

4. CASE STUDY RESULTS

The results of best forecasting methods among MLP-NN in 4

scenarios and 7 benchmarked forecasting methods based on
MSE are presented in Table 4. The results show that MLP-
NN outperforms existing forecasting methods for uncertain
and unpredictable demand patterns when all inputs features
are used with all parts (M-S3) or single feature with single
part (M-S1). This highlights strong correlation between input
features which is not considered in existing forecast methods.
Whereas, MLP-NN, being data driven AI method, was able Fig. 4. Comparison of all method’s MSE (without M-S2 & M-
to capture this correlation in terms of weights for accurate S4) for 12 period in PART1
forecasts. Moreover, worst results are observed from M-S2
and M-S4 scenarios. These results are as expected because
forecasting accuracy is likely dependent on specific features;
hence, when one feature is used for all parts, the worst results
emerge. Similarly, when all features are combined with all
parts during training and validation of MLP-NN using sample
parts data, correlation between demand patterns of parts do
influence the forecast accuracy.

Table 4. Best and worst methods based on sample of 30

parts (MSE)
Method Best Best% Worst Worst%
M-S1 14 46.67 0 0
M-S2 0 0 2 6.67
Fig. 5. MSE comparison of 9 methods (without M-S2 & M-
M-S3 13 43.33 0 0 S4) for sample of 30 parts
M-S4 0 0 28 93.33
The sampled 30 parts are placed into two groups as group-1:
Croston 0 0 0 0
Cr. SNB 0 0 0 0
17 parts belonging to intermittent class and group-2: 13 parts
MA 1 3.33 0 0 belong to all other demand classes. The demand classes for
Cr. SBJ 0 0 0 0 the sampled parts are computed using CV2 and ADI cutoff
Cr. TSB 1 3.33 0 0 values (Syntetos, Boylan, and Croston, 2004). In intermittent
SES 0 0 0 0 group, best methods’ average MSE over 12 periods (sliding
1Commercial 1 3.33 0 0 windows) is 1.35. In this group, 14 parts were best predicted
by the MLP-NN method. The difference in MSE for rest of
the 3 parts between existing methods and MLP-NN is small.
In the second group, average MSE of best methods is 18.35
1
This refers to method used by existing material management ERP system at which is quite high in comparison with parts in intermittent
Dassault Aviation

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group, best predicted by MLP-NN in scenarios M-S1 and M-

S3. This suggests that for intermittent demand class, MLP-
NN gives better forecast accuracy when used in the 1 feature
1 part (M-S1) or all features 1 part (M-S3) scenarios. This
also suggests that for erratic and lumpy parts MLP-NN do not
give better results irrespective of scenario due to the fact that
they are highly variable in demand sizes.

5. FINANCIAL IMPACT

In order to quantify the accuracy gained in terms of forecast,

positive and negative errors are computed. The positive and
negative errors refer to overstocking and understocking. The
former results in higher inventory costs whereas later is more Fig. 7. Comparison of total costs of intermittent category in
critical as it affects customers’ satisfaction. This is difficult to two group (EC and NC)
compute over and understocking costs; hence, arbitrary %age
of price is used such that understocking cost is either equal or
higher than overstocking cost (Table 5).

Table 5. Defined inventory policies

Overstocking Cost Understocking Cost
Scenario
(% of unit Price) (%age of unit Price)
S1 10% 10%
S2 10% 20%
S3 10% 30%
S4 10% 40%
S5 20% 20%
S6 20% 30% Fig. 8. Comparison of total costs of other category in two
S7 20% 40% group (EC and NC)
With above 7 inventory cost scenarios, we computed costs
for two groups (intermittent and others) and existing methods
and neural network methods referred EC and NC. The results
are presented below in Figures 6, 7 and 8 as total (over and
understocking) costs for both, intermittent and other groups,
respectively.

Fig. 9. Total percentage of cost saving improvement in each

inventory scenario

Fig. 6. Comparison of total costs in two group (EC and NC)

The results showing cost reduction because of more accurate
forecasting by the MLP-NN in scenarios MS-1 and MS-3, for
both, intermittent and other groups, across all inventory cost
scenarios, are presented in Figures 8 and 9, respectively. In
both of the Figures, we see significant cost improvements and
in particular for intermittent group where NN outperformed
other methods.
Fig. 10. Total percentage of cost saving improvement in each
inventory scenario and each group

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6. CONCLUSIONS
The forecast accuracy of existing forecast methods developed
for irregular demand patterns is low. This is true particularly
for spare parts supply chains of business aircrafts. The reason
is unpredictable and unknown usages and flight patterns, and
emerging non contractual business strategy due to multiple
suppliers complying with product quality standards, varying
costs and lead times. Hence, demand in such supply chains is
highly unpredictable and uncertain. We argue that existing or
variants of forecast methods to cater irregular demand pattern
is not valid in uncertain and unpredictable demand patterns.
Consequently, data driven AI based forecast methods could
provide more accurate results. The best and frequently used
AI method for uncertain demand forecasts, in the literature, is
NN and its variants. These are validated for many industries
but never tested for business jet aircraft manufacturers where
demand is not only uncertain but also unpredictable. In this
paper, results conclude that NN alone are not sufficient in the
business aircraft spare parts supply chain. The NN when used
in 1 feature 1 part or multiple features with 1 part gives us
best accuracy over existing forecast methods, developed for
irregular demand patterns. The financial impact also supports
the conclusion drawn from results. The encouraging results
do highlight future perspectives in demand forecasting of the
spare parts for business aircraft where methodology must be
developed to mix existing and AI based methods for overall
significant gains. Moreover, the spare parts which frequently
switch demand classes must be further investigated to select
appropriate forecast method or introduction of new demand
classification. It is also highly important to find answer that
the demand forecasting method must be selected at individual
part or demand class levels to address the computational costs
and complexity.
There is also one limitation of the study that it is very specific
to business jet spare parts supply chain. However, our future
research focusses on identifying not only ADI and CV2 cut
off values but also new classification for those parts changing
their respective classes in short periods. The later can be then
further generalized for any other industry as spare parts class
depends on its demand pattern.
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