Omega 105 (2021) 102513

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Review

Intermittent demand forecasting for spare parts: A Critical review ✩

Çerağ Pinçe a,∗, Laura Turrini b, Joern Meissner c
a
Quinlan School of Business, Loyola University Chicago, 16 E. Pearson St., Chicago, IL 60611, USA
b
EBS Business School, Burgstr. 5, 65375 Oestrich Winkel, Germany
c
Kuehne Logistics University, Großer Grasbrook 17, 20457 Hamburg, Germany

a r t i c l e i n f o a b s t r a c t

Article history: Spare parts demand forecasting has received considerable attention over the last fifty years as it is a
Received 8 October 2019 challenging problem for many companies. This paper provides a critical review and quantitative analysis
Accepted 23 June 2021
of the current literature on spare parts demand forecasting methods. First, we describe how different
Available online 3 July 2021
research streams in the literature have developed over time and review each stream extensively. Then, by
Keywords: gleaning information from the available studies, we carry out a quantitative analysis to provide granular
Spare parts insights into why and when a particular forecasting method should be preferred.
Intermittent demand
© 2021 The Authors. Published by Elsevier Ltd.
Forecasting
Inventory control
This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/)

Contents

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Literature review framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Time-series forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1. Parametric approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1.1. Croston and its modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1.2. Methods taking demand obsolescence into account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1.3. Other parametric time-series methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1.4. Parametric bootstrapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Nonparametric approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2.1. Nonparametric bootstrapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2.2. Other nonparametric methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3. Forecast improvement strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3.1. Demand classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3.2. Data aggregation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Contextual forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1. Judgmental forecasting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2. Installed base forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5. Comparative studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1. Performance measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1.1. Forecast accuracy measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1.2. Inventory performance measures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2. Performance comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Quantitative literature analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

✩
This manuscript was processed by Associate Editor Prof. Ben Lev.
∗
Corresponding author.
E-mail addresses: cpince@luc.edu (Ç. Pinçe), laura.turrini@ebs.edu (L. Turrini), joern.meissner@the-klu.org (J. Meissner).

https://doi.org/10.1016/j.omega.2021.102513
0305-0483/© 2021 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

6.1.
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2.
Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2.1. Comparison of croston and SBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2.2. Comparison of Croston and SBA with traditional methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2.3. Comparison of Croston and SBA with new parametric methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2.4. Comparison of Willemain with new nonparametric methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2.5. Comparison of nonparametric and parametric methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2.6. Comparison of methods using installed base information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2.7. Comparison of methods using data aggregation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

1. Introduction and stock control performance, we exclude spare parts inventory

Many companies and after-sales service providers carry spare
parts stocks to minimize downtime risks and assure equipment
availability. The main challenge faced by these companies is to find
the right balance between the inventory holding costs incurred
by large inventories of slow-moving and intermittent spare part
stocks, and the equipment downtime costs. For example, a two-
hour delay for an aircraft can cost an airline up to $150,0 0 0 [1];
not surprisingly, the commercial aviation industry’s total spending
on spare part stocks exceeds $10 billion annually [2].
At the heart of the cost-availability tradeoff challenge lies an-
other critical problem: spare parts demand forecasting. Spare parts
exhibit erratic, lumpy, or intermittent demand patterns involving
long series of zero-demand periods. Traditional time-series meth-
ods, such as exponential smoothing or moving averages, often fail
to provide accurate estimates for such demand patterns because
they place weight on the most recent data points. Consequently,
these methods generate fluctuating demand forecasts that grad-
ually decrease to their lowest level before a demand occurs and
jump to their highest level immediately after.
One of the earliest studies pointing out this difficulty and
proposing an alternative approach is Croston [3]. In this seminal
paper, Croston suggests forecasting the inter-demand time and de-
mand size separately through exponential smoothing to overcome
the issue of putting too much emphasis on the most recent obser-
vations. Since then, spare parts demand forecasting has received
significant academic attention, and numerous methodologies and
research streams have evolved to form a rich body of literature
(Fig. 1).
In this paper, we provide a critical review and quantitative anal-
ysis of the current literature on spare parts demand forecasting
methods. We describe how different research streams in the litera-
ture have developed over time and review each stream extensively.
We then carry out a quantitative analysis by gleaning information
from the available empirical studies to shed light on the perfor-
mance of spare parts demand forecasting methods. We focus on
the following questions: What is the overall performance of stan-
dard spare parts demand forecasting methods? How do traditional
or newer methods perform compared to these standard methods?
What are the factors explaining the performance differences be-
tween these methods? Why and when should a particular forecast-
ing method be preferred?
To provide a rigorous review of the field, we concentrate only
on spare parts demand forecasting papers. We do not review stan-
dard forecasting methods commonly used in supply chain con-
texts, such as exponential smoothing or the autoregressive inte-
grated moving average (ARIMA) models. However, we occasionally
mention some of these methods, as they also appear in the spare
parts demand forecasting literature. We refer the reader to [4] for
an excellent review of these methods. Similarly, while we exten-
sively discuss the link between spare parts demand forecasting
management methods from our review as they are beyond our pa-
per’s scope. For an extensive review of these methods, we refer the
reader to Hu et al. [5] and Basten and van Houtum [6]. In a similar
vein, Topan et al. [7] gives an overview of papers on operational
interventions in spare parts planning.
Our paper’s scope is similar to that of Boylan and Syntetos
[8], which is spare parts demand forecasting. Bacchetti and Sac-
cani [9] also provide a literature overview on this theme; however,
their focus is mainly on investigating the gap between research
and practice through case studies. While our review may overlap
with these and some other reviews mentioned above, our contri-
bution differs from these earlier papers in two critical ways. First,
we provide a current and in-depth examination of spare parts de-
mand forecasting literature. Except for Boylan and Syntetos [8] and
Bacchetti and Saccani [9], none of the other reviews specifically
focus on spare parts demand forecasting, which has been rapidly
growing over the last two decades with many new methods and
research streams emerging. Second, we synthesize the literature
through a quantitative analysis. To our best knowledge, our review
is the first carrying out such analysis of performance measures and
methods developed for spare parts demand forecasting. As a result,
we offer more precise insights into when a particular forecasting
method should be used and identify interesting future research av-
enues.
2. Literature review framework
The spare parts demand forecasting literature can be subsumed
under three major categories and several subcategories that closely
follow the literature’s evolution over time. The framework of our
literature review is summarized in Fig. 2.
The review framework is a natural classification of papers on
spare parts demand forecasting literature and shares some similar-
ities with the classification schemes offered in earlier reviews [e.g.,
5,9]. Different from these previous schemes, we provide a separate
section on comparative studies and treat demand classification and
data aggregation methods as forecast improvement strategies. We
also consider installed base and judgemental forecasting methods
under the bigger category of contextual forecasting. Below we ex-
plain each category in more detail.
The first major category consists of papers on time-series fore-
casting methods (Section 3). Most time-series methods rely on
historical data to generate demand forecasts and do not incor-
porate contextual information; however, they differ depending on
whether they take a parametric or nonparametric approach. Para-
metric approaches often assume that the lead-time demand fol-
lows a known probability distribution (e.g., normal, Poisson). In
contrast, nonparametric approaches derive the lead-time demand
distribution from the data. Parametric approaches can also be di-
vided into various categories depending on whether they pro-
pose a modification of Croston, incorporate demand obsolescence,

2
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 1. Evolution of spare parts demand forecasting literature.
Fig. 2. Literature review framework.
use statistical bootstrapping, or take a different approach, whereas
the nonparametric approaches can be classified into bootstrapping
methods and other nonparametric methods, such as the empiri-
cal method [10] and its extensions, and neural network models
applied to spare parts demand forecasting. We review parametric
and nonparametric time-series approaches and their subcategories
in Sections 3.1 and 3.2.
Two research streams that branched out of time-series forecast-
ing methods focus on forecast improvements by demand classifi-
cation or data aggregation. Demand classification schemes catego-
rize data as smooth, erratic, lumpy, or intermittent based on var-
ious demand characteristics and recommend the best performing
forecasting method for each demand type. Data aggregation meth-
ods, on the other hand, aim to reduce demand variability by ag-
gregating data at various levels and combining different forecast-
ing methods. We refer to these techniques collectively as forecast
improvement strategies and review them in Section 3.3.
The second major category involves methods that systematically
combine contextual information with statistical forecasting tech-
niques to rapidly respond to unexpected or structural changes in
demand (Section 4). Contextual information can be broadly cat-
egorized as the additional information derived from an expert’s
opinion or the installed base’s condition that can be potentially
helpful in estimating spare parts demand. The papers focusing
on expert judgment investigate whether judgmental adjustments
improve statistical forecasts. In contrast, the papers considering
3
Omega 105 (2021) 102513
installed base information study how contextual factors such as
maintenance schedules, equipment age, or operating conditions in-
fluence spare parts demand. We review both research streams in
Sections 4.1 and 4.2.
The third major category consists of comparative studies pro-
viding performance benchmarks for traditional and alternative
spare parts demand forecasting methods (Section 5). They carry
out extensive empirical tests by using industrial or simulated data
sets and measure the methods’ performances based on forecast
accuracy or inventory performance. In these comparative studies
and in the rest of the literature, the tests often use several mea-
sures to give a sense of each particular method’s overall perfor-
mance. However, there seems to be no clear consensus on the set
of best performance measures for spare parts demand forecasting
methods. While most studies use forecast accuracy measures, oth-
ers show that inventory performance measures yield more realistic
benchmarks [e.g., 11]. Thus, to investigate whether there are com-
monly used performance measures in the literature, we carry out
a quantitative analysis of the forecast accuracy and inventory per-
formance metrics reported and briefly explain their main charac-
teristics (Section 5.1). We then review the comparative studies in
detail (Section 5.2).
The remainder of this paper is organized as follows:
Section 3 reviews the time-series forecasting methods.
Section 4 reviews the contextual forecasting methods.
Section 5 provides an overview of the performance measures
Ç. Pinçe, L. Turrini and J. Meissner
commonly used in the literature and reviews the comparative
studies. Section 6 discusses the insights obtained from the liter-
ature analysis. Section 7 concludes with an outlook on research
opportunities.
3. Time-series forecasting
Inventory management for any item begins with estimating the
mean and variance of the lead-time demand and then fitting a
demand distribution to these two parameters. This information is
typically used to calculate the optimal safety stock levels to achieve
a specific availability target (e.g., fill rate, cycle service level, cus-
tomer waiting time) or minimize the total system cost. The fore-
casting step in this two-step procedure is usually carried out with
a time-series forecasting method. Time-series forecasting meth-
ods are prevalent in practice due to their simplicity and ease of
implementation. They rely mainly on historical data and do not
attempt to incorporate contextual information (e.g., expert judg-
ments, product characteristics, maintenance information) to iden-
tify the drivers of spare parts demand. Consequently, they require
less effort for data collection and can be easily automated by using
data readily available in ERP systems.
Because of their prevalence and practicality, there is a large
body of literature on time-series methods that have been devel-
oped to estimate spare parts demand. These techniques can be
broadly categorized as parametric, nonparametric, and forecast im-
provement approaches. In the following subsections, we systemati-
cally review these methods by further categorizing them into more
focused research substreams to present the state of the art in time-
series-based spare parts demand forecasting techniques.
3.1. Parametric approaches
In parametric approaches, demand is assumed to follow a hy-
pothesized probability distribution, and the mean and variance of
the demand are estimated with a forecasting method. Once de-
mand is characterized by a probability distribution, inventory pol-
icy metrics (e.g., reorder points, safety stocks) are calculated by
extrapolating this characterization to lead-time demand. While in
principle, this approach can be used with any type of data and
forecasting method, classic techniques, such as simple exponential
smoothing (SES), generate inaccurate estimates for intermittent de-
mand. This is because the updating mechanisms in these classic
methods are not tailored for long streaks of zero-demand periods,
as are typically observed in intermittent demand patterns. Croston
[3] was the first paper to investigate this problem and develop a
new forecasting method for intermittent demand, which has since
become known as Croston’s method or, shortly, Croston. Over the
years, many scholars have proposed modifications of Croston, and
it has become one of the standard performance benchmarks for
spare parts demand forecasting methods. In Section 3.1.1, we pro-
vide a detailed explanation of Croston and review its modifications.
Another critical characteristic of spare parts demand is obsoles-
cence. Spare parts demand can vanish, and due to the prevalence
of zero-demand periods, it may take a long time before a forecaster
detects obsolescence. Such a delay in obsolescence detection, how-
ever, is costly, as stocks of nonmoving, expensive spare parts incur
high holding costs (due to tied capital, warehousing, handling, etc.)
without contributing to the service level [e.g., 12,13]. Due to the
significance of this problem, there is a growing research stream on
intermittent demand forecasting methods that take demand obso-
lescence risk into account; we review these papers in Section 3.1.2.
In Sections 3.1.3 and 3.1.4, we review other parametric methods
focusing on different aspects such as cross-correlations between
demand intervals and sizes, random shifts in demand distribution’s
4
Omega 105 (2021) 102513
Table 1
Comparison of inventory performance between SES
and Croston.
SES Croston
Average on-hand inventory 477 456
MAE 74.26 65.73
RMSE 133.9 126.6
mean, or estimating the hypothesized demand distribution’s pa-
rameters through bootstrapping.
3.1.1. Croston and its modifications
Although exponential smoothing is widely used in practice, its
application to intermittent demand has a significant drawback, as
pointed out by Croston [3]. Exponential smoothing is biased since
forecasts are generated during positive-demand periods, referred to
as issue points, and the bias depends on the average interarrival
time. Consequently, it produces a sawtooth forecast pattern when
used for estimating intermittent demand (Fig. 3a). That is, expo-
nentially smoothed forecasts generated at issue points always over-
estimate actual demand, and this error increases during the inter-
demand interval. Croston [3] shows this behavior analytically and,
as a solution, suggests decomposing the demand process into two
components, inter-demand time and demand size, and forecasting
each component separately with exponential smoothing. The fore-
casts are updated only during periods with positive demand and
are combined to estimate the demand per unit of time.
More specifically, if st denotes the inter-demand time and zt de-
notes the demand size observed in period t, Croston can be given
as
if zt = 0 : sˆt = sˆt−1 , zˆt = zˆt−1
if zt = 0 : sˆt = α st + (1 − α )sˆt−1 , zˆt = α zt + (1 − α )zˆt−1 ,
where sˆt and zˆt are the one-step-ahead forecasts of inter-demand
time and demand size generated at the end of period t. Then, the
demand forecast is equal to Yˆt = zˆt /sˆt . Croston compresses zero de-
mand periods and updates forecasts only when there is positive
demand. Consequently, it generates smoother estimates with less
error variation, as shown in Fig. 3a, and thereby leads to lower
safety stocks for the same service level. We illustrate this point
with the following constructed example.
Example. Consider the generated intermittent demand data pre-
sented in Fig. 3b. Demand during the replenishment lead time (L)
is assumed to be normally distributed, and the inventory system
is controlled by an order-up-to policy. For a given cycle service
level ρ , the optimal order-up-to level can be given as S = μ(L ) +
σ (L ) −1 (ρ ), where μ(L ) and σ (L ) are the mean and standard de-
viation of the lead-time demand, and  is the standard normal
distribution function. The mean and standard deviation of √lead-
time demand are computed as μ(L ) = Yˆt L and σ (L ) = RMSEt L, in
which Yˆt denotes the demand forecast generated by SES or Croston,
and RMSEt denotes the root mean squared error. The results of the
inventory system simulation with the forecasts generated by the
two methods and a 85% target cycle service level are summarized
in Table 1. As Table 1 shows, Croston achieves a lower on-hand in-
ventory than SES at the same cycle service level due to its smaller
forecast errors calculated by the mean absolute error (MAE) and
RMSE.
Syntetos and Boylan [14] point out the bias in Croston and pro-
pose a modified procedure in which the demand forecast is given
as Yˆt = zˆsˆt −1 for a given c. For the method to be theoretically un-
sˆt c t
biased, c should be infinite, but a good approximation is obtained
when c is set to approximately 100. Syntetos and Boylan [15] pro-
vide an analytical approximation of the bias in Croston and pro-
pose another forecasting method to correct this bias. In the liter-
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 3. Exponential smoothing and Croston.
ature, this method is often referred to as the Syntetos-Boylan ap-
proximation
 (SBA).
 According to SBA, the demand forecast is given
by Yˆt = 1 − α2 zsˆˆt , where (1 − α /2 ) is the bias correction coeffi-
t
cient with smoothing constant α . Using a dataset from the au-
tomotive industry, Syntetos and Boylan [15] show that SBA gives
more accurate results than Croston, SES, and the simple moving
average for fast intermittent demand.
Our quantitative literature analysis (Section 6) shows that SBA
consistently generates more accurate forecasts than Croston for
spare parts demand data. However, in inventory measures, Cros-
ton outperforms or ties with SBA depending on the data type. For
highly intermittent and decreasing demand patterns, Croston out-
performs SBA, whereas for demand patterns with moderate to low
intermittence and variability, SBA leads to slightly better inventory
performance than Croston. We discuss the insights behind these
observations in more detail in Section 6.
Levén and Segerstedt [16] extends Croston for both slow- and
fast-moving items by introducing a somewhat simpler procedure
in which the ratio between the last observed demand quantity and
the demand interval is smoothed with the previous period’s de-
mand rate forecast. As in Croston, the forecasts are updated only
at the end of those periods in which demand occurs. The authors
claim that their method has better inventory performance than
SES. However, Boylan and Syntetos [17] show that this method
has higher bias than Croston or SES. Teunter and Sani [18] con-
duct a more general investigation of the bias in Croston and its
modifications proposed by Syntetos [19], Levén and Segerstedt [16],
and Syntetos and Boylan [15]. Their numerical study shows that
the [16] method has the largest bias, whereas [19] method has
the lowest bias. The study also reveals that the biases in differ-
ent methods are mainly determined by the smoothing parame-
ter and demand probability but are little affected by the demand
type.
3.1.2. Methods taking demand obsolescence into account
In the context of spare parts forecasting and inventory control,
demand obsolescence means that a spare part is not needed or de-
manded anymore. This can occur gradually or suddenly, depending
on the operating environment of the spare parts. For example, sud-
den obsolescence happens if the equipment for which the part is
needed is relocated or taken out of operation somewhat unexpect-
edly. Or if a newer version of a part replaces the old version due
to an upgrade. In contrast, a more gradual decrease in a part’s de-
mand happens as the equipment enters its end-of-life phase and
new generation equipment begins to dominate the market. In ei-
ther case, demand obsolescence is an important problem for many
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Omega 105 (2021) 102513
companies carrying spare parts inventories as it often leads to ex-
pensive dead stocks that are difficult to dispose of due to their
specificity [e.g., [12,13]]. Thus, responding to demand obsolescence,
preferably before or quickly after it occurs, is crucial for efficient
spare parts management.
Teunter et al. [21] note that Croston and its modifications are
slow to adjust to new demand levels when demand gradually de-
creases or suddenly becomes zero. To address these issues, they in-
troduce a new method, referred to as TSB, that combines demand
size forecasts with demand probability forecasts instead of demand
interval forecasts. Another difference between the new method and
Croston and SBA is that it updates the demand probability esti-
mate in every period. In contrast, the latter methods update their
estimates only after a demand occurrence. Consequently, forecasts
generated by TSB are adjusted downward when there are no de-
mand occurrences and can react to obsolescence more quickly.
Through a simulation study, Teunter et al. [21] show that TSB is
more accurate than SES, Croston, and SBA in terms of the mean er-
ror (ME) and the mean squared error (MSE) for both stationary and
nonstationary demand patterns. However, they also note that fur-
ther research is needed to empirically test the performance of TSB
against the other methods. Indeed, in a follow-up empirical paper,
which uses the UK Royal Air Force (RAF)1 and automotive datasets,
Babai et al. [26] show that TSB does not lead to significantly more
accurate forecasts than the other methods. Such performance dif-
ferences between experiments carried out with industrial and sim-
ulated datasets are not uncommon in the literature. As we discuss
in detail in Section 6.2, simulation studies are typically tailored to
specific purposes and cannot capture many of the factors affect-
ing real-life demand patterns, such as maintenance regimes, differ-
ences between Original Equipment Manufacturers (OEMs) and the
end-users of spare parts, or unplanned batch ordering of parts by
the end-users.
Building on these earlier works, Babai et al. [27] propose a
new method, referred to as modified SBA, that addresses TSB’s ac-
curacy shortcomings with industrial datasets. The modified SBA’s
forecast updates are similar to those of SBA during positive de-
mand periods, but when the risk of obsolescence increases, the
1
This is the single most commonly used dataset in the spare parts demand fore-
casting literature. The original dataset consists of monthly demand observations of
50 0 0 spare parts (SKUs) over seven years. As this original dataset has been used
in many other studies [e.g., [11,22,23]], in the rest of our review, we will shortly
refer to it as the RAF dataset. Two exceptions are Eaves and Kingsman [24] and
Mohammadipour and Boylan [25]. These papers also report using a dataset from
the UK RAF, but these datasets involve a larger number of SKUs than the original
RAF dataset.
Ç. Pinçe, L. Turrini and J. Meissner
updates become similar to those of TSB. Using the RAF and auto-
motive datasets, they show that the modified SBA outperforms all
other methods (SES, Croston, SBA, TSB) in terms of bias (ME) and
MSE. Especially for spare parts associated with decreasing demand,
the modified SBA yields higher benefits due to increased accuracy.
Their study also highlights that the implementation of the Croston
and SBA methods in enterprise resource planning systems should
be carried out carefully, as these methods cannot deal well with
obsolescence or decreasing demand patterns.
Following Teunter et al. [21], Prestwich et al. [28] propose
an alternative method that incorporates sudden obsolescence risk,
which is referred to as hyperbolic exponential smoothing (HES).
HES is similar to TSB, but the forecasts decay hyperbolically instead
of exponentially. Using simulated data, the authors show that TSB
yields the most accurate estimates of demand patterns with sud-
den obsolescence. This is because the hyperbolic decay in HES dur-
ing zero demand periods captures obsolescence more slowly than
the exponential decay in TSB. On the other hand, HES is more ro-
bust to changes in smoothing factors than TSB, making it a more
straightforward method to calibrate in practice, as there is often
limited history for intermittent demand.
In some practical situations, it is also important to identify
parts with obsolescence risk. Such capability would help to reduce
inventory costs significantly, especially for expensive and slow-
moving spare parts. van Jaarsveld and Dekker [12] study this prob-
lem by using the spare parts demand data of a complex techno-
logical product. They model the part obsolescence process by a
two-state absorbing Markov chain in which the states represent
healthy and obsolete demand cases. The parts are grouped based
on their demand over a specific period, and their obsolescence risk
is estimated using the past behavior of similar groups. They con-
clude that for slow-moving items with high risk of obsolescence
the company should carry lower stocks.
3.1.3. Other parametric time-series methods
Pennings et al. [29] present a method that incorporates posi-
tive cross-correlation between interarrival times and demand sizes
to anticipate incoming spare parts demand. They also introduce a
variant of [30] bootstrapping method in which the probability of a
demand occurrence is approximated by using the empirical distri-
bution of demand occurrences during the lead time. By using five
different industrial datasets, they benchmark their method against
standard methods (SES, Croston, SBA, 21,30) according to forecast
accuracy and inventory performance. In the forecast accuracy mea-
sures, SBA is found to be the overall best performer; in inventory
measures, the proposed method outperforms the other methods if
there is a strong positive cross-correlation between the demand
size and the interarrival time.
[31] develop a new method incorporating possible random
shifts in the mean of the demand distribution. The method models
the spare parts demand distribution with various counting distri-
butions (Poisson, negative binomial, and hurdle shifted Poisson) for
which the mean can change over time through a recurrence rela-
tionship. The recurrence relations update the mean by smoothing
the previous period’s mean and the demand realizations. These dy-
namic shifts in the mean reflect the effects of possible structural
changes in the underlying demand distribution (e.g., phases of the
product life cycle, obsolescence, seasonal demand). Successive fu-
ture demand realizations are sampled from these prediction distri-
butions to obtain an estimate of future demand series. This new
method is compared to static demand distribution models and tra-
ditional forecasting methods by using a database on car parts de-
mand.
The results show that these dynamic models can yield substan-
tial accuracy gains over the alternatives. However, they are techni-
cally involved (require advanced knowledge of statistics and sim-
6
Omega 105 (2021) 102513
ulation) and less intuitive than traditional methods such as Cros-
ton or SBA. Thus, it might be challenging to explain these mod-
els to spare parts demand management professionals. On the other
hand, the paper also shows that if a simpler static distribution is
preferred for modeling spare parts demand, the best option is the
negative binomial distribution, as it allows for greater variability.
In contrast, the Poisson distribution is too restrictive and should
be avoided.
Following Snyder et al. [31], Jiang et al. [32] propose another
distribution-fitting forecasting method that reflects the changes
in the underlying demand process using a mixed zero-truncated
Poisson hurdle model. The empirical analysis conducted with data
from an electric power company shows that the proposed method
outperforms Croston, the Poisson model, the hurdle Poisson model,
and the hurdle shifted Poisson model in all forecast accuracy mea-
sures. While both Snyder et al. [31] and Jiang et al. [32] offer in-
teresting and promising parametric approaches to forecasting in-
termittent demand, more research is needed to better assess the
performance of these prediction-distribution methods in compari-
son to other parametric and nonparametric methods.
3.1.4. Parametric bootstrapping
Parametric bootstrapping is a simulation technique that uses
estimated distribution parameters to generate lead-time demand
data. In general, bootstrapping techniques are useful when direct
estimation of the policy parameters is difficult due to a lack of
historical data or extreme irregularity in the shape of the demand
distribution, which makes it hard to directly describe the demand
distribution with a parametric distribution. Parametric bootstrap-
ping, however, is not entirely distribution-free; a certain family of
demand distributions (e.g., normal, log-normal) must be assumed
to conduct parametric bootstrapping. Nonparametric bootstrapping
methods, which do not assume a specific demand distribution, are
discussed in Section 3.2.1. Below and in Section 3.2.1, we briefly
review the bootstrapping methods developed for spare parts de-
mand forecasting. A more detailed review of these methods can be
found in Hasni et al. [33].
Snyder [34] introduces two parametric bootstrapping methods
based on Croston, referred to as the log-space adaptation and the
adaptive variance version. These methods use demand history to
produce least-squares estimates of the mean and standard devi-
ation of demand and the SES’s smoothing parameter. The empir-
ical distribution of lead-time demand is constructed through re-
peated simulations and used to compute order-up-to levels. Nu-
merical tests conducted with a dataset from the automotive in-
dustry show that the adaptive variance method performs best by
achieving the fill-rate target with the lowest inventory. However,
the paper acknowledges that the proposed parametric bootstrap
approaches ignore the effects of estimation error. Thus, they may
have a tendency to underestimate the variability of lead-time de-
mand and to suggest lower safety stocks than is necessary.
Varghese and Rossetti [35] propose another parametric boot-
strapping algorithm in which demand occurrences are generated
by a two-state Markov chain and demand sizes are generated by
using a Poisson, negative binomial, or mixed distribution. The au-
thors compare their method with Croston and SBA using the accu-
racy measures MSE, MAE, and the mean absolute percentage error
(MAPE). They conclude that there is no outperformer among the
methods, but SBA performs slightly better than the others. Hasni
et al. [36] take an inventory performance perspective and focus on
the service levels achieved by parametric and bootstrapping meth-
ods. They modify the bootstrapping methods proposed in Wille-
main et al. [30] and Zhou and Viswanathan [37] by adjusting the
way those algorithms sample lead-time demand. Using the RAF
dataset and a jewelry item dataset, they show that their modified
Ç. Pinçe, L. Turrini and J. Meissner
methods lead to considerable service-level improvements, but the
underestimation problem for high fill-rate targets remains.
The quantitative analysis presented in Section 6 further syn-
thesizes the performance results of the newer parametric meth-
ods discussed above (Sections 3.1.2–3.1.4). Our analysis shows that
in forecast accuracy measures, the newer parametric methods per-
form better than Croston for almost all data types. For automo-
tive and electronics datasets, SBA has an accuracy advantage over
newer methods. However, for military, military aviation, and elec-
trical parts, the results are less conclusive and depend on the spe-
cific accuracy measures used.
In terms of inventory performance, both SBA and Croston seem
to be better choices than new or classic parametric methods. In
particular, for industries with high target service levels and mod-
erate to high demand intermittency (e.g., railway, military, and mil-
itary aviation), Croston outperforms newer methods due to its ten-
dency to yield higher service levels. On the other hand, for auto-
motive datasets, which show moderate intermittency and down-
ward trends, the inventory performances of SBA, Croston, and the
newer methods are similar.
3.2. Nonparametric approaches
All of the parametric methods discussed so far assume that
lead-time demand follows a particular probability distribution.
Methods following the nonparametric approach, on the other hand,
do not assume a specific lead-time demand distribution but recon-
struct their empirical distributions, typically, through a bootstrap-
ping procedure. Consequently, nonparametric methods are more
flexible and can be used with any kind of demand distribution, in-
cluding those that are difficult to describe with a parametric dis-
tribution family [38].
In practice, complex demand patterns often occur as a result of
maintenance policies. For example, car tires are replaced in pairs
to have the same wear profile. Similarly, all seals connected to a
pump are usually replaced together to have a lower maintenance
cost and downtime risk. Nonparametric methods can accommo-
date such nonsmooth demand patterns relatively easily. However,
for homogeneous demand sizes, bootstrapping methods should be
applied with caution because simple sampling methods can gener-
ate empirical distributions leading to poor inventory performance
[11].
In this section, we first review the nonparametric bootstrapping
approaches and present their advantages over the classic paramet-
ric approaches. We then continue by reviewing other distribution-
free techniques, such as [10] empirical method and neural network
models, and identify their advantages over bootstrapping and the
well-known parametric methods.
3.2.1. Nonparametric bootstrapping
The classic bootstrapping method, which was introduced by
Efron [39] and applied to inventory management by Bookbinder
and Lordahl [40], has frequently been used in the intermittent de-
mand context. These bootstrapping methods sample from past de-
mand realizations until M bootstrapped statistics of the lead-time
demand are obtained and order them to calculate the empirical
distribution, denoted by Fˆ . That is, if 1 − α is the target service
level, the appropriate reorder level is calculated as the α -quantile
of the empirical distribution (Fˆ −1 (1 − α )). Fricker and Goodhart
[41] propose a variation of the classic bootstrapping method to ad-
dress the problem of scarce historical data, a common issue with
intermittent demand. This method assumes a stochastic lead-time
and produces Fˆ , as in classic bootstrapping. Each lead-time de-
mand observation is created for a different lead-time value, sam-
pled from its distribution, and the reorder point is set to minimize
the Euclidean distance between the empirical stockout risk (F̄ˆ (z ))
7
Omega 105 (2021) 102513
and the target stockout risk (α ). They compare their method with
the [40] classic bootstrapping method and another approach, re-
ferred to as the normal approximation technique. They find that the
two bootstrapping methods result in higher service levels than the
normal approximation technique, but the performance difference
between their method and the classic bootstrapping methods is in-
significant.
Willemain et al. [30] modify the classic bootstrapping method
to better model intermittent inventory data with autocorrelation,
frequently repeated values, and relatively short time series. To
capture the autocorrelation, the authors use a two-state Markov
process to model zero and nonzero demands and evaluate the
transition probabilities directly from the data using the counting
techniques presented in Mosteller and Tukey [42]. The transition
probabilities are used to generate a sequence of zeros and ones
in which the ones indicate positive demand realizations. Demand
sizes are then generated through a jittering procedure in which the
sampled demand values are modified by introducing random varia-
tion. Through an empirical study based on multiple industrial data
sets, they show that their bootstrapping method generates more
accurate results than SES or Croston.
Zhou and Viswanathan [37] introduce another version of boot-
strapping that generates demand intervals through bootstrapping
and demand sizes through sampling. They compare this method
with SBA in terms of inventory performance using simulated and
empirical data. They find that the proposed method outperforms
SBA for the simulated data; however, SBA outperforms the pro-
posed method if the comparisons are carried out with the empiri-
cal data. In a follow-up paper, Hasni et al. [23] conduct a more ex-
tensive comparative study and confirm that SBA has better inven-
tory performance than the [37] bootstrapping method for highly
intermittent demand and short lead times. On the other hand, the
latter outperforms SBA and Willemain for moderately intermittent
demand and long lead times.
Kocer [43] generalizes [30] method by using higher-order
Markov chains. They show that their proposed method decreases
the MAPE of the lead-time demand forecast, but it performs sim-
ilarly to Croston, if the accuracy measure is the mean absolute
scaled error (MASE) of the period demand.
3.2.2. Other nonparametric methods
Porras and Dekker [10] introduce a new nonparametric method
in which the empirical distribution of the lead-time demand is di-
rectly constructed from the data without sampling. This method
is simpler than bootstrapping methods and is often referred to as
the empirical method. An empirical study carried out with a dataset
supplied by a petrochemical processing company shows that the
empirical method performs better than Willemain in terms of in-
ventory cost, as the latter estimates slightly higher reorder points
to achieve the same service level. However, they also find that the
simple parametric normal-distribution method outperforms both
nonparametric methods.
Van Wingerden et al. [44] extend the empirical method by in-
corporating randomness into lead times. An empirical study based
on three different industrial datasets reveals that the proposed
method’s inventory performance regarding the holding cost and fill
rate tradeoff is slightly better than that of the empirical method.
However, the proposed method often performs worse than SBA,
except in the case of expensive spare parts with very slow-moving
and highly variable demand. In a similar vein, Zhu et al. [45] pro-
pose a modification of the empirical method by applying extreme
value theory to model the tail of the lead-time demand distribu-
tion. Through simulations and an empirical study, they show that
the modification leads to shorter expected waiting times, higher
cycle service levels, and better target service level achievement
than the empirical method. On the other hand, comparisons of this
Ç. Pinçe, L. Turrini and J. Meissner
method’s service level performance with that of other alternatives
(Willemain, Croston, SBA) are inconclusive.
Another developing category of nonparametric methods in-
volves papers applying machine learning techniques to spare parts
demand forecasting. The general idea behind these papers is to
learn demand patterns directly from the data through a super-
vised learning algorithm, such as neural networks. Neural net-
works are considered a versatile tool that can capture nonlinear
patterns in the data, such as intermittence and lumpiness, better
than most time-series methods. One of the earliest studies in this
stream is by Gutierrez et al. [46]. They compare their neural net-
work model with SES, Croston, and SBA using an electronic prod-
ucts distributor’s data and show that it generally produces more
accurate forecasts than the other methods unless the training and
test datasets have significantly different average demand sizes. By
using the same dataset, Mukhopadhyay et al. [47] compare a mod-
ified version of [46] method with traditional methods (SES, Cros-
ton, SBA, weighted moving average). The comparisons show that
the modified neural network method outperforms the other meth-
ods according to the MAPE and the median relative absolute error
(MdRAE).
Kourentzes [48] generalizes [46] method by incorporating three
different network settings and the Levenberg-Marquardt algorithm
to improve the training speed. In contrast to Gutierrez et al. [46],
they find that the neural network method performs worse in
terms of accuracy measures (ME and MAE) and better in terms of
achieved service levels than the Croston-type methods. They par-
tially attribute this contradictory partially to the differences be-
tween the datasets used by both studies (a short monthly inter-
mittent demand series vs. a long lumpy demand series). They also
argue that forecast accuracy metrics lead to misleading findings for
intermittent demand data.
Lolli et al. [49] propose a neural network with a simpler and
faster learning algorithm, referred to as an extreme learning ma-
chine. They benchmark its performance against [46] and [47] meth-
ods using an automotive dataset. They show that the neural net-
works using back-propagation learning [46,47] perform better than
the extreme learning machine in terms of MAPE, but the latter is
easier and faster to implement. Guo et al. [50] combine a genetic
neural network model with three exponential smoothing variants
and a hierarchical forecasting method. By using aircraft spare parts
data, the authors show that the combined method generates more
accurate forecasts than each method’s direct forecasts.
To generate more insights into the value of nonparametric
methods, we analyze the results of the performance comparisons
between the parametric and nonparametric methods, as described
in Section 6. In summary, our analysis reveals that, on aver-
age, Willemain’s bootstrapping method is more accurate than the
newer nonparametric methods; however, it can perform poorly de-
pending on the data type and the method with which it is com-
pared. For lumpy demand series with large spikes, Willemain tends
to selectively pick these large demand values to forecast the pe-
riod’s demand, thereby leading to higher service levels. Thus, for
datasets characterized by high degree of lumpiness (e.g., military
aviation and automotive datasets), Willemain tends to yield bet-
ter inventory performance. On the other hand, for low or moder-
ately lumpy demand series, newer nonparametric methods should
be preferred for better inventory performance, as Willemain often
fails to achieve the target service level.
We also find that nonparametric methods generally have bet-
ter forecast accuracy and inventory performance than paramet-
ric methods. However, the comparison results are scattered, and
some studies report divergent findings for the same datasets. Thus,
the advantage of using these relatively more complicated meth-
ods is not apparent due to their potentially higher implementation
cost.
8
Omega 105 (2021) 102513
3.3. Forecast improvement strategies
Spare parts have different underlying demand characteristics re-
quiring different estimation approaches. Understanding these char-
acteristics can be useful because a method’s performance may
depend on them. In this section, we begin by reviewing papers
that focus on demand classification and distribution fitting meth-
ods. The primary purpose of these papers is to identify the best-
performing forecasting method for given demand characteristics
to facilitate stock control. We then continue by reviewing stud-
ies that focus on forecast improvements through data aggregation.
These papers aim to reduce the variability in spare parts demand
– emerging from many periods of zero demand and highly vari-
able demand sizes – by grouping the data by time, demand vol-
ume, item characteristics, the forecasting methods used, or a com-
bination of these alternatives. Below, we review these forecast im-
provement strategies in two separate sections.
3.3.1. Demand classification
The objective of demand classification methods is to match the
demand characteristics with the most appropriate estimation pro-
cedure to improve forecasting and stock control. One of the earliest
studies on this topic is Williams [51], in which product demand
is categorized as sporadic, slow-moving, or smooth by decompos-
ing lead-time demand variance into causal elements. Each demand
category is then fitted with a specific distribution to calculate re-
order levels using data on a public utility. Numerical comparisons
show that the proposed demand classification scheme leads to a
substantial reduction in inventory cost compared to an assumption
of continuous demand for all products.
Willemain et al. [52] conjecture that for data with too much
or too little intermittency, Croston should not have any significant
accuracy improvement over SES. Johnston and Boylan [53] provide
quantitative evidence for this conjecture by proposing a forecasting
method based on estimates of the mean and variance of demand
size and the average inter-demand interval. Their numerical study
shows that if the average inter-demand interval exceeds 1.25 re-
view periods, the proposed method generates more accurate fore-
casts than the exponentially weighted moving average (EWMA).
They also define the average inter-demand interval ( p) as a de-
mand classification parameter.
Syntetos et al. [54] extend [53] work by suggesting an addi-
tional demand classification parameter, the squared coefficient of
variation of demand (CV 2 ). They analytically compare the MSEs of
Croston, SBA, and EWMA to derive cutoff values for CV 2 and p.
These cutoff values are then used as a two-dimensional demand
classification scheme to find the most accurate forecasting method.
The classification scheme’s validity is confirmed using a large num-
ber of demand series from the automotive industry. Kostenko and
Hyndman [55] criticize this study by claiming that SBA yields
smaller MSEs than Croston in some of the instances reported by
Syntetos et al. [54] and propose a more accurate cutoff value for
determining when SBA should be preferred over the other meth-
ods.
Building on these earlier works, Boylan et al. [56] examine the
demand classification scheme’s stock control implications. Using
data provided by a company developing demand planning soft-
ware, they show that zero-demand-period counts can be an alter-
native classification parameter. However, the forecasting methods
suggested under this new classification scheme fail to achieve the
target service levels for lumpy demand. Syntetos et al. [57] extend
this line of research by empirically investigating the link between
the classification parameters ( p and CV 2 ) and the fit between the-
oretical demand distributions and industrial datasets. They recom-
mend heuristic rules for the best theoretical demand distribution
for inventory control based on these empirical observations. In ad-
Ç. Pinçe, L. Turrini and J. Meissner
dition to these works, other papers test [54] classification scheme
in other industrial contexts, such as the automotive [58] and com-
mercial aviation [59–62] industries.
Several other papers offer alternative approaches to the demand
classification problem. Lengu et al. [63] provide an empirical anal-
ysis to assess whether compound Poisson distributions provide a
good fit for spare parts demand and propose a demand classifi-
cation scheme categorizing SKUs based on the mode and variabil-
ity of the observed demand sizes. Empirical tests using industrial
datasets (household appliances, commercial aviation) show that
the compound Poisson distributions considered by the classifica-
tion scheme generally provide a good fit for intermittent demand
items. In a similar vein, [64] investigate the best-fitting distribu-
tions for spare parts demand. They combine SES, Croston, and SBA
with various lead-time demand distributions to create prediction
distributions, which are then used in an empirical inventory simu-
lation with the RAF dataset. They show that SBA has the best over-
all inventory performance and that distributions fitted to high de-
mand percentiles yield the largest inventory savings.
Petropoulos et al. [65] investigate the main determinants of
forecast accuracy based on eight characteristics (seasonality, trend,
cycle, randomness, number of observations, p, CV 2 , forecasting
horizon) and propose a practical selection procedure that matches
these data characteristics to the most appropriate forecasting
method. Through an extensive simulation study, they find that
when p is long, TSB and a four-period moving average outperform
the other standard methods (naïve2 , SES, Croston, SBA) in terms of
accuracy. On the other hand, for high values of CV 2 , either Croston
or SBA should be preferred.
A common assumption in demand classification methods is that
the interarrival times follow a Bernoulli or Poisson distribution.
However, these distributions cannot account for increasing fail-
ure rates due to their memoryless property and therefore fail to
capture actual intermittent demand patterns [66]. Syntetos et al.
[67] address this issue by investigating the performance of EWMA,
Croston, and SBA for Erlang-distributed interarrival times and pro-
viding alternative demand classification cutoff values. They con-
clude that the average inter-demand interval is a useful classifica-
tion criterion for the Erlang distribution assumption, but CV 2 has
less explanatory power than suggested in earlier studies.
3.3.2. Data aggregation
Data aggregation is another way to improve the performance
of spare parts demand forecasting methods. The main idea is to
aggregate data with similar demand patterns, either temporally or
across time series, to reduce the number of zero-demand periods
and make forecasts more accurate. Below, we review the studies
that propose different aggregation strategies for spare parts de-
mand forecasting methods and discuss how they improve these
methods’ performance.
Willemain et al. [52] is one of the earliest studies investigat-
ing the effects of temporal data aggregation on the performance
of Croston’s method. Their results show that Croston performs
more accurately with aggregated weekly data than with daily data.
Nikolopoulos et al. [22] introduce a temporal aggregation frame-
work, referred to as ADIDA (aggregate-disaggregate intermittent
demand approach), in which forecasts are allocated back into the
original (disaggregated) time series after they have been generated
with temporally aggregated data. Using the RAF dataset, they show
that ADIDA can significantly improve the performance of the naïve
and SBA methods.
It is important to note that the temporal aggregation level
should be chosen carefully as a level significantly higher or lower
2
The naïve method produces forecasts equal to the last observed demand value.
9
Omega 105 (2021) 102513
than the lead time duration may lead to poor performance. For ex-
ample, if demand is aggregated to monthly values while lead times
are expressed in days, the benefits of temporal aggregation will
most likely be lower. Nikolopoulos et al. [22] suggest that a po-
tential remedy for this issue is to set the aggregation level equal
to the lead time length plus one review period. They claim that
this heuristic would also be practically valuable since in periodic
review inventory systems forecasts are generated to determine the
safety stocks for this time period.
Babai et al. [68] extend [22] study by investigating the inven-
tory performance of ADIDA for three forecasting methods (Croston,
SBA, and SES) with the same (RAF) dataset. They conclude that for
these forecasting methods, ADIDA results in higher service levels
than those achieved with the disaggregated data. In a similar vein,
Mohammadipour and Boylan [25] propose a temporal aggregation
scheme for the integer auto-regressive moving average (INARMA)
process. The authors analytically show that aggregation of INARMA
process over a time horizon results in an INARMA process. More-
over, using a dataset from UK RAF3 and an automotive dataset,
they demonstrate that the forecasts generated by the aggregation
method have, in most cases, lower MSEs than the cumulative fore-
casts obtained by summing up the h-step ahead estimates.
Following Nikolopoulos et al. [22], Petropoulos et al. [69] de-
velop a new aggregation framework, referred to as iADIDA (inverse
ADIDA), that performs aggregation over demand volumes (instead
of time) to reduce demand variability. Their empirical examination
shows that iADIDA improves forecast accuracy and works better
for datasets with high levels of data-volume variance. Boylan and
Babai [70] analytically compare the statistical performance of the
nonoverlapping and overlapping temporal aggregation approaches.
Using a dataset from the jewelry industry, they show that the ap-
proach aggregating time series by using overlapping time buckets
outperforms the nonoverlapping approach unless the demand his-
tory is short or the demand is very slow-moving.
An alternative forecast improvement strategy is to group items
with the same characteristics and then forecasting their aggregate
demand. This forecasting strategy is referred to as cross-sectional or
hierarchical forecasting. Moon et al. [71] compare direct and hierar-
chical forecasting methods using a military dataset from the South
Korean Navy. In their study, direct forecasting methods based on
SES are generated by combining different temporal aggregation
levels (monthly, quarterly, yearly) and trend/seasonality adjust-
ments. Hierarchical forecasts are then generated by using item-
and group-level direct forecasts. They find that a simple combina-
tion of SES models (quarterly data aggregated at the group level
and monthly data at the item level) minimizes forecasting errors
and inventory costs.
In a more recent study, Li and Lim [72] demonstrate the value
of hierarchical forecasting for intermittent demand forecasting.
They propose a greedy aggregation-decomposition method involv-
ing a new hierarchical structure that utilizes aggregated and dis-
aggregated forecasts. This proposed method is tested with an ar-
ray of forecast accuracy measures using intermittent demand data
on fashion products. The results show that the authors’ proposed
method performs better than other widely used techniques, such
as Croston and SBA, and temporal aggregation approaches, such as
ADIDA and iADIDA.
Combining forecasts derived from alternative methods is an-
other well-known forecast improvement strategy. Using the RAF
dataset, Petropoulos and Kourentzes [73] compare the perfor-
mances of three different combination strategies. The first strat-
egy combines the forecasts of classic methods (naïve, moving av-
3
The dataset used in this study seems to be different from the original RAF
dataset used in other studies, as it involves monthly demand observations of 16,0 0 0
SKUs over six years.
Ç. Pinçe, L. Turrini and J. Meissner
erage, SES, Croston, SBA) using the original sampling frequency
of the time series. The second strategy uses a single forecasting
method at different temporal aggregation levels with ADIDA. The
third strategy combines different methods for different temporal
aggregation levels. They conclude that combining forecasts from
transformed frequencies from the same or multiple methods im-
proves forecasting performance. They also show that forecasting
accuracy can be further improved by using classification schemes
[54,55].
Another forecast improvement strategy is outlier detection.
Quite often, there is planned-maintenance demand in industrial
datasets. While there are forecasting methods that take such
maintenance tasks into account [e.g., [45,74,75]], an alternative
way to tackle these demand spikes is to treat them as out-
liers. As most of these planned maintenance tasks can be fore-
seen accurately, inventory should be planned ahead of their oc-
currence. Thus, removing such large demands from the dataset
through outlier detection can improve the forecasting methods’
performance.
Overall, we conclude that data aggregation methods positively
influence forecast accuracy and inventory performance. As we dis-
cuss in more detail in Section 6, the comparative studies show that
temporal aggregation increases forecast accuracy for datasets char-
acterized by highly variable inter-demand intervals, such as the
military aviation data. On the other hand, for datasets character-
ized by erratic patterns and high demand-volume variance, such
as automotive data, demand-volume aggregation performs better.
Furthermore, the combination of forecasts generated across differ-
ent group levels and aggregation frequencies also improves fore-
casting accuracy for spare parts embedded in hierarchical struc-
tures such as weapons systems. In terms of inventory perfor-
mance, the general takeaway from the literature is that aggregation
yields higher service levels at a lower cost for erratic and lumpy
demand.
4. Contextual forecasting
Spare parts demand is often nonstationary and follows the life-
cycle pattern of the equipment in which the components are in-
stalled. It is also dynamically influenced by other contextual fac-
tors, such as maintenance schedules, equipment age, and operat-
ing conditions. Time-series forecasting methods take into account
this additional contextual information only through historical data
and, therefore, can be slow to adapt to demand changes driven by
these external factors. The idea behind contextual forecasting is to
overcome these difficulties by systematically combining all avail-
able information, broadly categorized as expert judgment and in-
stalled base information, with statistical methods to improve fore-
casting performance.
Because of their potential to improve spare parts demand fore-
casts, contextual forecasting methods have received increasing at-
tention from researchers over the last two decades. Depending on
the type of contextual information, the papers published in this
area can be categorized into two research streams. The papers in
the first category investigate how judgmental interventions impact
the performance of statistical forecasting methods. The papers in
the second category focus on developing new forecasting methods
that incorporate installed base information. Below, we review these
research streams in two separate sections.
4.1. Judgmental forecasting
Statistical forecasting methods are seldom used in practice
without expert interventions and updates [76–78]. Early empiri-
cal studies suggest that judgmental adjustments improve statisti-
cal forecasts by taking into account relevant information, such as
10
Omega 105 (2021) 102513
different market types and conditions faced by various products,
that could not be factored in with a statistical model [e.g., [79–
81]]. Other studies provide contradictory empirical evidence sug-
gesting that judgmentally adjusted forecasts can lead to worse per-
formance than statistical forecasts because forecasters may have
limited access to quantifiable information [82], put too much
weight on their subjective contributions [82,83], or make re-
peated bold adjustments based on inaccurate information [84].
More recent articles examine the role that intentional biases play
in group forecasts [85] or the impact of different time horizons
on the accuracy and characteristics of judgmental adjustments
[86].
Although the literature suggests that quantitatively derived
forecasts are frequently adjusted by human forecasters, judgmen-
tal demand forecasting is an under-researched area in the op-
erations and supply chain management fields [87,88]. Not sur-
prisingly, the literature investigating the link between judgmen-
tal interventions and intermittent demand forecasting is even more
limited.
Syntetos et al. [89] is one of the few studies that looks into this
question. By analyzing monthly demand and forecast data provided
by a pharmaceutical company, they show that judgmentally ad-
justed forecasts, which take into account market intelligence gath-
ered by company forecasters, are more accurate than those gener-
ated by statistical methods. However, they also show that adjusted
forecasts do not improve over time, whereas statistical forecasts
do, and that negative adjustments generally perform better than
positive adjustments. They conclude that the increased accuracy of
adjusted forecasts leads to better stock control.
In a similar vein, Boutselis and McNaught [90] describe an
interesting single-period forecasting problem: demand for spare
parts for military equipment is to be forecasted over a limited fu-
ture time period (e.g., the duration of a military operation), during
which the actual spare parts demand can change significantly due
to changes in the operational context. The authors propose three
different Bayesian network models that incorporate observational
data, expert opinions, or both to generate single-period spare parts
demand forecasts. They find that the Bayesian network approaches
outperform the expert-adjusted SES and logistics regression meth-
ods in terms of accuracy.
Both of these papers hint that systematic judgmental adjust-
ments can be beneficial for intermittent demand forecasting. How-
ever, the benefits most likely depend on the characteristics of the
demand series and how these adjustments are incorporated into
the forecasts. Given the practical relevance of judgmental forecast-
ing in the context of intermittent demand, more research is needed
to generalize these initial findings.
Next, we briefly review the supply chain literature on judgmen-
tal forecasting that takes a broader perspective than spare parts
demand management. Syntetos et al. [91] extend the investigation
of Syntetos et al. [89] to non-intermittent demand items and show
that judgmental adjustments can lead to better stock control than
statistical methods by achieving higher service levels with a lower
on-hand inventory. Fildes et al. [92] empirically show that judg-
mental adjustments are most effective if they are large, consistent,
and negative. In a theoretical study, Syntetos et al. [93] develop
a system dynamics model to evaluate the effects of forecast and
order adjustments at various stages in a supply chain. They show
that the impact of forecast and order adjustments on factory stock
amplification decreases as the intervention point moves upstream
(from retailer to factory) in the supply chain.
Another study that focuses on the impact of judgmental fore-
casting within the supply chain is Eksoz et al. [94]. Relying on
survey data, the authors show that sharing judgmentally adjusted
forecasts facilitates group forecasting efforts between manufactur-
ers and retailers. For further discussions and reviews of judgmental
Ç. Pinçe, L. Turrini and J. Meissner
forecasting in the contexts of supply chain and operations manage-
ment, we refer the reader to Goodwin et al. [95], Arvan et al. [88],
and Perera et al. [96].
4.2. Installed base forecasting
The term installed base is defined by Dekker et al. [97] as “the
whole set of systems or products for which an organization pro-
vides after-sales services,” and the term installed base information
typically refers to information on such equipment’s quantity, loca-
tion, operational environment, failure rate, and condition derived
from maintenance and remote monitoring activities. Installed base
forecasting methods use this information to predict potential fu-
ture equipment failures and generate more accurate spare parts
demand forecasts.
The idea of using installed base information in spare parts de-
mand forecasting is not new. Cohen et al. [98] suggest incorporat-
ing part failure rates and the number of installed machines into
exponential smoothing to improve spare parts demand forecasts at
IBM. Petrović and Petrović [99] develop logistics software, referred
to as SPARTA II, that combines a Bayesian algorithm and fuzzy set
theory with installed base information to estimate the probabil-
ity of satisfying spare parts demand and to calculate stock levels.
Aronis et al. [100] present a case study in which part failure rates
for telecommunication systems are estimated using the Bayesian
approach. These estimates are then used to forecast demand for
new parts that do not have a failure history. In another case study,
Ghobbar and Friend (2002) investigate the link between demand
lumpiness and installed base information for aircraft spare parts.
Using a general linear model and data from an airline operator,
they show that maintenance (condition-based) and utilization in-
formation (flying hours and number of landings) for aircraft are
the two major sources of the lumpiness observed in the parts’ de-
mand patterns.
However, none of these papers benchmark their proposed
method’s performance against well-known spare parts demand
forecasting methods. One of the earlier works taking this avenue
is Hua et al. [101]. They estimate the probability of a demand oc-
currence in each period as a function of contextual variables (plant
and equipment overhaul) with a logistics regression. Using a petro-
chemical company dataset, they show that their method outper-
forms SES, Croston, and Willemain according to two new forecast
accuracy measures that they introduce.
A series of papers following Hua et al. [101] introduce methods
using maintenance information to improve spare parts forecasting.
Wang and Syntetos [102] propose a method based on planned and
corrective maintenance information (block- and age-based inspec-
tion) using the delay time modeling concept, which defines a two-
stage failure process. Using simulations, they show that their pro-
posed method generates more accurate forecasts than SBA in al-
most all cases. Romeijnders et al. [75] develop a two-step forecast-
ing method that uses information on component repairs to more
quickly detect changes in the underlying demand rate. Through a
case study, they show that their method performs similarly to SES,
moving average, and TSB, whereas it outperforms Croston in terms
of MSE, MAE, and ME. They also show that if planned mainte-
nance tasks are taken into account, the forecasting errors can be
reduced by 20%. In a follow-up study, Zhu et al. [74] propose a
joint forecasting and inventory control method that uses planned
maintenance tasks as a source of advance demand information.
Using datasets from an aircraft service provider and Netherlands
Railways, they show that the proposed method yields a significant
reduction in total inventory costs over the traditional benchmark
methods (e.g., SES, Croston, SBA, TSB).
All of the studies above assume B2B settings in which com-
panies have somewhat advanced capabilities to monitor detailed
11
Omega 105 (2021) 102513
information (e.g., maintenance, location, service contract informa-
tion) about their installed base. In contrast, B2C companies rarely
have such granular data but rather a vague idea about their in-
stalled base size and obsolescence time. However, these companies
still need to forecast end-of-life (EOL) spare parts demand for their
products to honor warranty agreements. Kim et al. [103] focus on
these settings and propose a forecasting method that requires rela-
tively limited installed base information (sales and returns). Using
a database of consumer product components, they show that their
installed based forecasting method generates significantly more ac-
curate estimates than a simple autoregressive model.
In the same vein, Dombi et al. [104] also develop an installed
base forecasting model for consumer electronics products. They
combine analytic and fuzzy clustering techniques to estimate de-
mand curves for consumer electronics spare parts. Using a dataset
supplied by an electronics service provider, they show that their
method has the best accuracy performance when compared to SES,
ARIMA, and two soft computational forecasting methods. Building
on Wang and Syntetos [102] and Kim et al. [103], Van der Auw-
eraer and Boute [105] offer a more versatile method that incorpo-
rates information on maintenance policy, age, installed base size,
and part reliability. They compare the proposed method with SES
and SBA through a simulation study. Their findings suggest that
their proposed method can achieve the same cycle service levels
with lower inventories in the product’s maturity and EOL phases.
As we discuss in more detail in Section 6, using installed base
information substantially increases forecast accuracy, especially for
highly intermittent demand (e.g., parts demand for electric power
equipment or petrochemical machinery components). However, for
hard-to-forecast demand patterns, such as those characterized by
sudden drops or a high level of part commonality along with high
intermittence, the impact of installed base forecasting on accu-
racy is limited. Although there is some evidence indicating that in-
stalled base information can improve cycle service levels relative
to other well-known methods, more research is needed in this di-
rection to draw robust conclusions.
Overall, installed base information generates significant visibil-
ity for service supply chains and can yield significant cost sav-
ings by effectively addressing issues such as demand intermittence
and obsolescence. On the other hand, exploiting this information
is difficult due to the high costs associated with the collection,
standardization, and storage of big data [97,106]. Thus, more case
studies are needed to outline implementation guidelines and best
practices. For further discussion on the use of installed base infor-
mation for spare parts demand forecasting, we refer the reader to
Van der Auweraer et al. [107] and Hellingrath and Cordes [108].
5. Comparative studies
Comparisons between different forecasting methods have been
reported in the literature. These comparative studies provide per-
formance benchmarks for the traditional and alternative methods
used in practice to forecast spare parts demand. Often, they use in-
dustrial data sets and quantify the methods’ performance accord-
ing to several forecast accuracy or inventory performance mea-
sures. In this section, we begin by explaining these performance
measures and provide a quantitative overview of how frequently
they are used in the spare parts demand forecasting literature. We
then continue by reviewing the comparative studies and identify-
ing their contributions.
5.1. Performance measures
There are two main categories of performance measures: fore-
cast accuracy measures and inventory performance measures. Fore-
cast accuracy measures quantify the gap between historical de-
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

Table 2 sures to give a sense of a particular method’s overall performance.

Common absolute accuracy measures.
Among all the papers reviewed in this study, a total of 44 papers

MEt = 1t ts=1 es Mean error (bias) use at least one forecast accuracy measure in their benchmarking

MAEt = 1t ts=1 |es | Mean absolute error studies. Fig. 4 presents the distribution of the accuracy measures
1 t
MSEt = t  s=1 es2
Mean squared error
1 t
among these papers. The reported percentages are based on the
RMSEt = e2
t  s=1 s
Root mean squared error
t e s  number of papers in which a particular measure or one of its close
s=1
MAPEt = t Mean absolute percentage error derivatives (e.g., ME or ME scaled) is used.
s=1 Ys
1  t |es |
MASEt = s=1 t Mean absolute scaled error Fig. 4 b shows that a large majority of the papers use abso-
i=2 |Yi −Yi−1 |
t 1

t 1 t−1
GMAEt = |es | t
s=1 Geometric mean absolute error
t 2  1t
GRMSEt = s=1 es Geometric root mean squared error
mand observations and forecasts, whereas inventory performance
measures consider how a particular forecasting method performs
in terms of service levels, on-hand inventory, stockouts, or total
inventory costs. Below, we briefly review these two categories and
highlight their differences from each other.
5.1.1. Forecast accuracy measures
Most accuracy measures are simple functions of the forecast er-
rors (es := Ys − Yˆs ) generated by a particular forecasting method.
These measures are referred to as absolute accuracy measures be-
cause they quantify a single forecasting method’s performance for
a given time series [15]. Common absolute accuracy measures are
shown in Table 2. Most of these standard measures, however, de-
pend on the scale of the data, making them impractical for com-
parisons across time series of different items. The exceptions are
the MAPE and MASE, both of which provide a scale-free measure-
ment of forecast accuracy.
When an accuracy measure quantifies various forecasting meth-
ods’ relative performances, it is referred to as a relative accuracy
measure. These measures compute one method’s accuracy relative
to that of other methods, typically by using an absolute mea-
sure as a baseline performance metric. Examples of relative accu-
racy measures are the relative geometric root mean squared error
(RGRMSE), relative root mean squared error (RRMSE), and relative
arithmetic mean absolute error (RAMAE). Two other common rel-
ative accuracy measures are the percentage better (PB) or percent-
age best (PBt), which rank the performance of different methods
based on the percentage of time they perform better or best ac-
cording to an underlying measure.
There are also other less common forecast accuracy measures
that have been proposed for particular forecasting methods or data
types. For example, Willemain et al. [30] introduce an accuracy
measure assessing the proximity of the estimated and hypothetical
lead-time distributions. Similarly, Hua et al. [101] develop an accu-
racy measure counting correct demand-occurrence predictions for
situations in which forecasting a demand occurrence is more criti-
cal than forecasting the demand size. Some studies suggest differ-
entiating between a method’s performance evaluated at all points
in time or only at the issue points because zero-demand periods
can influence the variance measurements [e.g., 17,53].
OEMs often complete a final production run to cover the spare
parts demand during the remaining life of a product before ceas-
ing its production. The size of this final order should be based
on a forecast of the total demand over the remaining service life.
To assess the quality of this forecast more accurately, Kim et al.
[103] propose an accuracy measure that quantifies the difference
between the summed forecasts and the summed demand over the
end-of-life (EOL) phase. They conclude that this alternative mea-
sure should be used as the main benchmark for EOL products as
it yields lower forecast errors than the MAPE and the root mean
squared percentage error (RMSPE).
Because there is no single forecast accuracy measure that is
generally accepted in the literature, most papers use several mea-
lute accuracy measures. This is to be expected because absolute
measures are simple and intuitive, and there are more options
for absolute measures than for relative measures or other types
of measures. PB and PBt are the least preferred measures, even
though relatively early studies consider them to be meaningful
measures for intermittent demand [15,46], whereas newly devel-
oped or less common measures represent a significant percentage
(9.4%). Fig. 4 a provides a more detailed view of the distribution
of the absolute accuracy measures. Interestingly, classic measures
such as MAE, MSE, and MAPE, remain the most commonly used
accuracy measures, despite criticism about their suitability for in-
termittent demand over the years [e.g., [30,65,109,110]]. For exam-
ple, Hyndman and Koehler [109] claim that MASE is the best fore-
cast accuracy measure for intermittent data, yet it is only the fifth
most commonly used absolute accuracy measure in the spare parts
demand forecasting literature. For a more detailed discussion of
forecast accuracy measures, we refer the reader to Hyndman and
Koehler [109], Wallström and Segerstedt [110], and Prestwich et al.
[111].
5.1.2. Inventory performance measures
Despite forecast accuracy measures’ widespread use, high fore-
cast accuracy does not necessarily imply high inventory perfor-
mance for spare parts [e.g., [11,91,112]]. Moreover, although the im-
plicit function of a spare parts demand forecasting method is to
serve as a demand planning tool for stock control, the number
of studies measuring a forecasting method’s impact on inventory
performance is surprisingly low. Among all the papers considered
in our review, we identified 29 papers using at least one inven-
tory performance measure in their benchmarking studies. Fig. 5
shows the distribution of the various inventory performance mea-
sures used in these papers.
We observe from Fig. 5 that the two most common inventory
performance measures are the service level and the tradeoff curve.
Almost all papers use the achieved cycle service level or fill rate as
a service level measure, whereas tradeoff curves are used to show
the tradeoff between inventory costs or volumes and achieved ser-
vice levels or backorder volumes. Syntetos et al. [113] claim that
tradeoff curves are practical and realistic inventory performance
measures compared to those involving a target service level or less
common metrics such as implied stock holdings or average regret.
Other standard inventory performance measures are the average
total cost (consisting of inventory holding and stockout costs) and
average on-hand inventory or stockout volumes. Similar to their
use of accuracy measures, most studies use a combination of these
measures to assess a forecasting method’s impact on spare parts
inventory [e.g., [2,23,37]].
A few other studies define their own alternative metrics to
benchmark inventory performance. For example, Snyder [34] mea-
sures a method’s inventory performance with the order-up-to level
necessary to achieve a 95% service level. Eaves and Kingsman
[24] propose a measure called implied stock holdings, which calcu-
lates the safety margin for zero stockouts, and Sani and Kingsman
[114] introduce a relative inventory performance measure, referred
to as average percentage regret, which gives the opportunity cost of
using a specific forecasting method.

12
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 4. Forecast accuracy measures used in spare parts demand forecasting.
Fig. 5. Inventory performance measures used in spare parts demand forecasting.
5.2. Performance comparisons
Willemain et al. [52] perform a comparison of Croston and SES
using both industrial and simulated data, which is generated to
violate Croston’s assumptions. For both data types, they conclude
that Croston outperforms SES according to most standard fore-
cast accuracy measures and has broader applicability than claimed
by Croston [3]. Sani and Kingsman [114] is one of the first pa-
pers to present a comparative study of various spare parts fore-
casting methods. They compare five different forecasting methods
with standard and ad hoc inventory policies based on annual in-
ventory cost and fill-rate measures. They show that the one-year
moving average has the best overall inventory performance, and
it is closely followed by Croston. They also show that SES provides
the highest fill rate but at the price of high inventory holding costs.
Along the same lines, Strijbosch et al. [115] compare two dif-
ferent (s, Q ) models with a simulation study. Both models use a
Croston-type forecasting method but differ mainly in their lead-
time demand model. The authors find that a compound Bernoulli
lead-time demand with mixed-Erlang demand sizes yields better
fill-rate performance than normally distributed lead-time demand.
Building upon these studies, Syntetos and Boylan [112] compare
the inventory performances of simple moving average, SES, Cros-
ton, and SBA under a periodic review order-up-to policy. They con-
clude that SBA has the best inventory performance overall, but the
moving average yields results very close to those of SBA.
Because a typical application of intermittent demand forecast-
ing methods is for aircraft spare parts, a series of papers conducts
comparative studies by using data sets from the commercial and
military aviation industries. Ghobbar and Friend [60] compare thir-
teen well-known forecasting methods (e.g., SES, EWMA, Croston,
13
Omega 105 (2021) 102513
Holt, Winter) according to their MAPEs with data obtained from
an airline operator. They conclude that the weighted moving av-
erage is superior to the other methods, and its performance in-
creases with the length of the temporal aggregation. Similarly, Re-
gattieri et al. [61] show that higher demand lumpiness consistently
leads to higher MAE, and the best-performing methods for com-
mercial aircraft spare parts demand are the weighted moving av-
erage, Croston, EWMA, and trend-adjusted exponential smoothing
methods. By using a dataset from the UK RAF4 , Eaves and Kings-
man [24] compare the performances of the SES, moving average,
naïve, Croston, and SBA methods based on standard forecast ac-
curacy measures and an inventory measure referred to as implied
stock holdings. Through a periodic review order-up-to policy, the
authors show that SBA yields the best implied stock holdings per-
formance. In terms of forecast accuracy, they conclude that there
is no best method overall, and traditional accuracy measures are
not ideal for making comparisons in the presence of slow-moving
intermittent demand.
To better understand the impact of trends on forecasting per-
formance, Altay et al. [2] compare SBA with [116] modification of
Holt’s method. They find that SBA consistently yields lower stock
levels at the expense of lower service levels, whereas [116] method
leads to higher service levels than SBA without significantly in-
creasing the total cost. Similar to earlier articles, Altay et al. [2] ob-
serve that comparisons based on standard forecast accuracy mea-
sures yield inconclusive results. According to Teunter and Duncan
[11], the reason why many comparative studies generate inconclu-
sive results is partly due to inappropriate choices of performance
measures. The authors illustrate this point by empirically showing
that the zero-forecast method (predicting zero demand in each pe-
riod) performs better than SES, moving average, Croston, SBA, and
a parametric bootstrapping method based on standard forecast ac-
curacy measures. They repeat these comparisons using inventory-
and service-level metrics and find that Croston, SBA, and the boot-
strapping method perform consistently better than SES and the
moving average. The zero-forecast method has the worst inventory
and service level performance, as expected.
The majority of comparative studies exclude bootstrapping
methods and focus on comparisons between standard parametric
methods and Croston and its modifications. One of the few arti-
cles investigating the value of bootstrapping methods is by Synte-
tos et al. [113]. By using data from the jewelry and electronics sec-
tors, they compare the inventory performances of [30] bootstrap-
ping method, SES, Croston, and SBA. The authors conclude that
4
The dataset used in this study seems to be different from the original RAF
dataset used in other studies, as it involves demand observations of 18,750 SKUs
over six years.
Ç. Pinçe, L. Turrini and J. Meissner
Table 3
Example calculation of percentage better scores.
Experiment Experiment Type
1 I1 -ME
2 I1 -MSE
3 I2 -ME
4 I2 -MSE
Total
Percentage Better
while [30] method usually performs better than the other meth-
ods, the performance differences are not very large, and parametric
techniques may be preferred due to their simplicity. Another com-
parative study involving a bootstrapping method is by do Rego and
de Mesquita [58]. Through a large-scale simulation study based on
automotive parts data, they show that the best performing method
in terms of the total cost and achieved fill rate is the modification
of [37] bootstrapping method for lumpy demand and SBA for er-
ratic demand aggregated to the monthly level.
6. Quantitative literature analysis
To provide a clearer synthesis of the state of the art in spare
parts demand forecasting research, we conduct a quantitative anal-
ysis of the findings in the literature. We first analyze the results for
the performances of the two standard benchmark methods: Cros-
ton and SBA. Our objective is to understand the settings in which
one method outperforms the other by analyzing the results of the
papers conducting such a comparison. We then extend this anal-
ysis to performance comparisons between these two benchmark
methods and other traditional or newer forecasting methods. We
continue our analysis by synthesizing the extant literature’s find-
ings on the performance of nonparametric and parametric methods
along with how incorporating of installed base information, human
judgments, demand classification, or data aggregation affects fore-
casting performance. Below, we first explain the methodology un-
derlying the literature analysis and then continue with a discussion
of our findings.
6.1. Methodology
Among all the papers reviewed in this study, we identified 56
papers suitable for our literature analysis, which report compar-
isons of various spare parts demand forecasting methods. Papers
that are not in line with the objectives outlined above are excluded
from the analysis. A complete list of papers included in each anal-
ysis can be found in Table A.1 in the Appendix. For each paper,
we count the number of times that the methods of interest out-
perform or tie with each other. For example, if an experiment in
a paper benchmarks the performances of SBA and three other tra-
ditional methods (SES, zero-forecast, and the naïve approach), we
count the outcomes of three possible comparisons (SBA vs. SES,
SBA vs. zero-forecast, SBA vs. naïve) to obtain better performance
scores for these methods. Ties can happen if the reported perfor-
mance results are the same or the tradeoff curves do not clearly in-
dicate a better performer. In our example, if we assume that in this
particular experiment, SBA outperforms the zero-forecast method,
is outperformed by the naïve method, and ties with SES due to in-
conclusive results, the better performance scores would be SBA 1,
traditional methods 1, and inconclusive 1.
Because the experiments are carried out with different data
sets, performance measures, parameter choices, and distributional
assumptions, it is difficult to define a common experiment type
across the literature. To overcome this difficulty, we categorize ex-
Omega 105 (2021) 102513
Better Performance Scores
Number of
SBA Traditional Inconclusive Comparisons
1 1 1 3
2 0 1 3
3 0 0 3
0 2 1 3
6 3 3 12
50% 25% 25% -
Fig. 6. Croston vs. SBA.
periments based on the data and performance measure type. This
categorization enables us to summarize the better performance
scores for each paper into a percentage better score. For example,
if a paper compares SBA and the traditional methods based on
two forecast accuracy measures (e.g., MSE and ME) using two in-
dustrial data sets (e.g., I1 and I2 ), the percentage better scores for
those experiments can be computed by dividing the total better
performance scores by the total number of comparisons, as shown
in Table 3.
We average these percentage better scores across the papers re-
porting similar experiments to obtain an average percentage better
(APB) score based on the data or performance measure type used,
as shown, for example, in Table 4. Thus, the average percentage
better score gives the overall performance of a particular method–
or a group of methods–across the papers carrying out similar com-
parisons with different experimental setups and data.
A more detailed analysis based on another overall-performance
measure that takes actual experimental measurements into ac-
count, however, is not feasible. This is because each paper presents
its empirical study results at different levels of detail and conducts
experiments based on different setups. Consequently, it is not pos-
sible to carry out a more detailed analysis by directly using the
reported results. On the other hand, the two-step approach de-
scribed above–in which we first calculate the percentage better
scores per paper and then average these scores over all relevant
papers–enables us to synthesize a diverse set of findings and gen-
erate more granular insights into the state of the literature.
6.2. Results
6.2.1. Comparison of croston and SBA
We begin our discussion with comparisons between Croston
and SBA, the two most common benchmark methods for spare
parts forecasting. Fig. 6 presents each method’s average percent-
age better score based on forecast accuracy and inventory perfor-
mance measures. In all figures and tables presented in this section,
N represents the number of relevant papers over which the aver-
age percentage better score is calculated.
14
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 7. Croston vs. SBA–Granular results by data type† .
Fig. 6 shows that overall, SBA performs better than Croston 87%
of the time when comparing the methods in terms of accuracy
measures. Fig. 7 provides more granular insights into these com-
parisons by breaking down the percentage better (PB) scores for
Croston according to the data types used by each paper comparing
Croston and SBA. We observe from Fig. 7a that in terms of accu-
racy measures, SBA consistently outperforms Croston for the dif-
ferent data types. The most significant exception is observed in Li
and Lim [72], in which the largest PB score for Croston in terms
of accuracy measures is reported. The dataset in this study comes
from a retailer of women’s fashion products (e.g., shoes, sunglasses,
bags) and exhibits highly seasonal patterns. Other exceptions are
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Omega 105 (2021) 102513
observed in Kocer [43], Varghese and Rossetti [35], and Kourentzes
[48]; however, none of these studies show that Croston offers a
significant improvement over SBA. Thus, SBA can be preferred over
Croston for industrial spare parts datasets if forecast accuracy is
the primary concern.
Fig. 6 also shows that SBA outperforms Croston on overage 21%
of the time in inventory measures, whereas Croston outperforms
SBA on average 45% of the time. However, many comparisons are
†
In the figures, y-axes give the percentage of comparisons in which Croston out-
performs SBA in a given paper (i.e., percentage better score for Croston).
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

inconclusive (34%), and most studies indicate rather small perfor-
mance differences between the two methods. The difference in
performance in terms of inventory control measures can be ex-
plained by the bias in Croston. Because Croston is positively bi-
ased, it leads to consistently higher average inventory and service
levels than the SBA method [e.g., [26,45,67]]. Moreover, our analy-
sis shows that service level is the most common inventory perfor-
mance measure used in the literature (see Fig. 5). Thus, the com-
bination of these two factors could lead to the slightly higher av-
erage inventory performance observed in the comparative studies.
Especially for highly intermittent or decreasing demand, Cros-
ton’s service level advantage becomes more pronounced, as SBA
tends to underestimate such demand patterns. Fig. 7b shows that
for automotive, aviation, and military aviation datasets, several
studies report better inventory performance by Croston as they
contain highly intermittent or downward-trending spare parts de-
mand data. On the other hand, for datasets that are neither partic-
ularly intermittent nor erratic, such as jewelry data, the inventory
performance of SBA is reported to be generally better than but very
close to that of Croston. Thus, Croston may be preferred for the
automotive, aviation, and military aviation industries in which the
service level is often the primary performance measure.
There are also other factors that may drive the observed dif-
ferences in performance in terms of inventory control and fore-
cast accuracy among the various studies. Measuring the inventory
performance of a method requires various input parameters, such
as the inventory policy, safety factors, lead time, the target service
level, the initial stock level and the price of the spare part. Forecast
accuracy measures, on the other hand, are more standardized and
treat all products the same. Aggregating data based on time, de-
mand volume, or product category also influences the performance
of a method. Especially when the two methods perform relatively
similarly to each other, as in the case of Croston and SBA, all of
these factors may contribute to the differences between the meth-
ods’ inventory control and forecast accuracy performances across
different studies, even if those studies use the same dataset.
6.2.2. Comparison of Croston and SBA with traditional methods
Table 4 summarizes the performance comparison of the two
benchmark methods (Croston and SBA) with traditional methods.
Traditional methods are parametric methods that were not devel-
oped for spare parts demand forecasting but are commonly used
in comparative studies as benchmarks and in practice due to their
simplicity (e.g., SES, moving averages, naïve forecasting, zero fore-
casting). In terms of accuracy measures, the overall performances
of Croston and of the traditional methods are very similar (45.8%
vs. 50.4%). In terms of inventory measures, however, Croston out-
performs the traditional methods (56.2% vs. 18.8%), which can be
attributed to Croston’s positive bias.
Fig. 8 shows the distribution of the PB scores for Croston–
in comparison to traditional methods–with respect to data types
and performance measures. For datasets from the aviation, mili-
tary, petrochemical, and retail industries, Croston’s accuracy perfor-
mance is generally better than that of the classic methods (Fig. 8a).
On the other hand, for electronics, electrical parts, manufactur-
ing, and marine engine datasets, the classic methods seem to have
higher accuracy. For the automotive and military aviation datasets,
however, comparisons of the accuracy performance between Cros-
ton and the traditional methods are less conclusive.
The variation in the accuracy performances of the methods
across industrial datasets can be explained by the intermittency
and demand size characteristics of the data. As suggested in Wille-
main et al. [52], there might be an optimal degree of intermittency
that justifies switching from a traditional method such as expo-
nential smoothing to Croston. That is, “too many zeros make it es-
sentially impossible to forecast well using any statistical method
while too few zero values make it unnecessary to abandon ex-
ponential smoothing.” Indeed, the electronics and electrical parts
datasets for which the traditional methods generate more accurate
forecasts than Croston are characterized by low intermittency and
large demand sizes [29,30]. Similarly, the marine engine dataset
consists almost entirely of zero demand instances [30]. On the
other hand, the aviation and petrochemical datasets are character-
ized by high intermittency and low demand sizes [29,30,101], to
which the underlying assumptions of Croston seem better suited
and which therefore lead to better accuracy performance.
In terms of inventory performance, Croston does not seem to
offer any advantages over the traditional methods for the auto-
motive, electronics, and jewelry datasets (Fig. 8b). For the military
and military aviation datasets, however, Croston significantly out-
performs the traditional methods. Croston’s performance improve-
ment can be explained by the fact that military operations require
high service levels and that both data types are characterized by
moderate to high intermittency. We obtain qualitatively similar in-
sights from the comparisons between SBA and the classic meth-
ods in terms of performance and data type. The main difference is
that the PB scores for SBA are slightly higher than those for Cros-
ton due to its bias correction. We refer the reader to Fig. A.2 in
the Appendix for detailed results for SBA performance by
data type.

Table 4
Croston and SBA vs. traditional methods.

Average Percentage Better (APB)

Number of
Croston Traditional Inconclusive Papers (N)

Accuracy measures Industrial data 43.8% 52.1% 4.1% 18

Simulated data 54.8% 42.9% 2.4% 7
Overall† 45.8% 50.4% 3.8% 23
Inventory measures Industrial data 57.7% 11.5% 30.8% 9
Simulated data 50.0% 50.0% - 3
Overall 56.2% 18.8% 25.0% 12

Average Percentage Better (APB)

Number of
SBA Traditional Inconclusive Papers (N)

Accuracy measures Industrial data 57.3% 41.0% 1.7% 15

Simulated data 52.8% 44.4% 2.8% 6
Overall 56.4% 41.7% 1.9% 19
Inventory measures Industrial data 58.3% 22.9% 18.8% 12
Simulated data 8.3% 50.0% 41.7% 3
Overall 50.4% 27.2% 22.4% 14

The number of papers (N) of the ‘Overall’ scores row can be different from the sum of the number of
papers reported in the above two rows as some papers use both industrial and simulated datasets.

16
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 8. Croston vs. traditional methods—Granular results by data type.
Table 4 also shows that for simulated data, the inventory per-
formance of Croston and SBA are less conclusive. That is, Croston
and the traditional methods tie (50% vs. 50%), whereas SBA is out-
performed by the traditional methods (8.3% vs. 50%), and there are
many inconclusive results (41.7%). Although the small number of
papers using simulated data (N = 3) casts doubt on the significance
of these observations, it is important to highlight that the indus-
trial datasets might potentially have very different patterns from
the simulated datasets to which a spare part forecasting method
such as Croston or SBA are better suited. For example, the spare
parts demand generated by maintenance and inspection regimes
may create demand spikes that are somewhat difficult to mimic in
17
Omega 105 (2021) 102513
a simulation [45,74]. OEMs selling spare parts may face demand
from several users and be less impacted by maintenance policies.
On the other hand, companies or organizations using spare parts
might have more slow-moving and uniquely installed parts.
Moreover, many simulation studies assume i.i.d. demand in-
tervals and demand sizes, whereas industrial data can have pos-
itively correlated inter-demand intervals and highly skewed de-
mand sizes. Willemain et al. [52] show that even under these less-
than-ideal conditions, Croston performs better than exponential
smoothing. Similarly, some simulation studies generate relatively-
fast-moving intermittent demand data for which the added value
from abandoning traditional methods is low [e.g., [2,27,48]]. All of
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

Table 5
Croston and SBA vs. new parametric methods† .

Average Percentage Better (APB)

Number of
Croston New Inconclusive Papers (N)

Accuracy measures Industrial data 18.0% 81.6% 0.4% 8

Simulated data 19.5% 79.3% 1.2% 8
Overall 18.6% 80.8% 0.6% 15
Inventory measures Industrial data 65.5% 16.7% 17.9% 4
Simulated data 60.0% 40.0% - 1
Overall 64.8% 19.6% 15.6% 5
Average Percentage Better (APB)

Number of
SBA New Inconclusive Papers (N)

Accuracy measures Industrial data 55.3% 36.7% 8.0% 7

Simulated data 27.5% 68.4% 4.1% 6
Overall 47.0% 46.2% 6.8% 12
Inventory measures Industrial data 25.0% 37.5% 37.5% 2
Simulated data 60.0% 40.0% - 1
Overall 32.0% 38.0% 30.0% 3

These are the methods reviewed in Section 3.1 (e.g., TSB, modified SBA, HES, parametric boot-
strapping and distribution-fitting methods).

these factors might contribute to the performance difference be-
tween the industrial and simulated datasets.
6.2.3. Comparison of Croston and SBA with new parametric methods
Table 5 presents the results of the comparisons between
the two benchmark methods and the newer parametric spare
parts forecasting methods that were developed after Croston and
reviewed in Section 3.1 [e.g., [21,27,29,32]]. We observe from
Table 5 that the newer methods have higher average accuracy and
lower average inventory performance than Croston.
Similar to the comparison with SBA, Croston’s inventory perfor-
mance advantage over the newer methods is likely to be driven by
its tendency to yield higher service levels for intermittent demand.
Indeed, for the railway, military, and military aviation datasets,
which are characterized by moderate to high intermittency and
high target service levels, Croston outperforms newer methods in
terms of inventory performance (Fig. 9b). On the other hand, for
the automotive datasets, Babai et al. [26] and Babai et al. [27] show
that the inventory performances of Croston, SBA, and the two
newer methods (TSB and modified Croston) are very similar, but
the newer methods perform slightly better (Fig. 9b). Thus, in terms
of inventory performance, both SBA and Croston seem to be better
choices than the new and classic parametric methods, with the lat-
ter being more suitable for industries in which a high service level
is important.
Fig. 9a shows that in terms of accuracy measures, Croston per-
forms worse than the newer methods for the majority of data
types except for the retail data used by Li and Lim [72]. For this
dataset, Croston outperforms both TSB and SBA, which may be ex-
plained by highly seasonal and potentially autocorrelated demand
patterns for fashion products, as Croston seems to perform well
when stationarity assumptions are violated [52].
Table 5 shows that the overall accuracy performance of SBA is
better than that of the new parametric methods (47% vs. 46.2%).
In particular, for automotive and electronics datasets, SBA seems
to generate more accurate forecasts than either Croston or the
newer methods (Fig. A.3a). For military, military aviation, and elec-
trical parts datasets, SBA and the newer methods compete depend-
ing on the accuracy measures used. However, for spare parts data
from the commercial aviation industry, Romeijnders et al. [75] re-
port that SBA generates significantly less accurate results than the
two newer methods (TSB and the two-step method). This is be-
cause the many slow-moving parts in this dataset have sudden
demand obsolescence (due to equipment upgrades or removals),
which Croston and SBA cannot deal with well, as discussed in
Section 3.1.2.
6.2.4. Comparison of Willemain with new nonparametric methods
To investigate the performance of the nonparametric meth-
ods, we first compare Willemain’s method with the nonparamet-
ric spare parts demand forecasting methods developed after it.
These newer methods include the empirical method, neural net-
work methods, and other forms of bootstrapping methods [e.g.,
[10,37,46]].
Fig. 10a shows that the overall performance of Willemain is
somewhat better than that of the newer nonparametric methods
(57% vs. 43% according to accuracy measures, 63% vs. 28% accord-
ing to inventory measures). However, this conclusion is based on a
small number of papers (N = 3, 6), and as shown in Fig. 11, Wille-
main’s accuracy and inventory performance can vary depending on
the data type. For example, Pennings et al. [29] report that Wille-
main generates more accurate results than their own nonparamet-
ric bootstrapping method (referred to as DLP) for all considered
datasets except the auto parts dataset. However, the specific rea-
sons behind Willemain’s superior performance are not clear. On
the other hand, Hua et al. [101] show that their method signifi-
cantly outperforms Willemain for datasets of spare parts from a
petrochemical company. This finding is likely to be the result of
that the method proposed by Hua et al. [101] uses more infor-
mation (demand autocorrelation and contextual information) than
Willemain.
In terms of inventory performance, Willemain tends to yield
higher service levels for datasets that are characterized by high
lumpiness, such as those found in military aviation and automotive
industries (Fig. 11b). This is because when there are large spikes in
demand, Willemain may selectively pick these values to forecast
the next period’s demand. Additionally, its jittering process tends
to increase variation around large demand values [10,45]. On the
other hand, for low or moderately lumpy demand series, such as
those found in the jewelry and commercial aviation spare parts
datasets used by Zhu et al. [45] and Hasni et al. [36], Willemain of-
ten fails to achieve the target service level. Thus, for such datasets,
the newer nonparametric methods can be preferred due to their
better inventory performance.

18
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

Fig. 9. Croston vs. newer methods—Granular results by data type .

Fig. 10. Performance of Willemain, nonparametric, and parametric methods.

19
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 11. Willemain vs. newer nonparametric methods—Granular results by data type.
6.2.5. Comparison of nonparametric and parametric methods
We continue investigating the performance of the nonparamet-
ric methods by comparing them with the parametric methods.
Fig. 10 shows that in general, the nonparametric methods out-
perform the parametric methods in terms of both types of per-
formance measures (64% vs. 35% according to accuracy measures
and 60% vs. 33% according to inventory performance measures).
In terms of accuracy measures, each paper yields somewhat clear
results in favor of or against the parametric methods (Fig. 12a).
The parametric methods generate more accurate results than the
nonparametric methods for the electric parts, military, and mili-
20
Omega 105 (2021) 102513
tary aviation datasets. For the automotive industry, two different
datasets and methods used by Pennings et al. [29] and Lolli et al.
[49] lead to two divergent conclusions. Similarly, for the electron-
ics data, Pennings et al. [29] report more accurate results for the
parametric methods, whereas several other papers point out that
the nonparametric methods, which are based on neural networks
or bootstrapping, generate significantly more accurate results than
the parametric methods. For all other data types, the most accurate
method is a nonparametric one.
In inventory measures, the nonparametric methods generally
perform better, but each study has some comparisons in which a
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 12. Parametric vs. nonparametric methods—Granular results by data type.
parametric method outperforms a nonparametric method for some
datasets (Fig. 12b). The only exception is the petrochemical refinery
data, for which Porras and Dekker [10] show that a simple para-
metric model, which assumes normally distributed spare parts de-
mand, achieves the best overall performance out of two other non-
parametric methods (Willemain and the empirical method). Simi-
larly, Syntetos et al. [113] report that for erratic data supplied by
an electronics manufacturer, SES yields a better tradeoff between
service level and inventory investment than does Willemain. Their
study also shows that for jewelry data, which are neither partic-
ularly intermittent nor erratic, the parametric and nonparametric
methods generate similar tradeoff curves. On the other hand, for
21
Omega 105 (2021) 102513
the same datasets, Hasni et al. [36] report mixed findings about
the service level performance of the parametric and nonparamet-
ric methods.
Thus, based on these and the other studies shown in Fig. 12b,
it is difficult to provide clear-cut recommendations between para-
metric and nonparametric methods in terms of inventory perfor-
mance and data type. Furthermore, some nonparametric meth-
ods, such as neural network-based models, can be very hard to
implement in business contexts. Consequently, the tradeoff be-
tween implementation costs and forecast improvements should
be carefully considered before adopting these technically involved
methods.
Ç. Pinçe, L. Turrini and J. Meissner
Fig. 13. Performance of methods using installed base information or data aggregation.
Fig. 14. Methods including installed base information—Granular results by data type (accuracy measures) .
6.2.6. Comparison of methods using installed base information
We also investigate the impact of contextual information and
data aggregation on the methods’ performances. Fig. 13a shows
comparisons between the methods that use installed base infor-
mation and those that do not (e.g., Croston, SES, TSB, Willemain).
The average percentage better scores suggest that using installed
base information substantially increases forecast accuracy (85% vs.
8%) for industrial and simulated datasets. Fig. 14 shows that espe-
cially for spare parts characterized by highly intermittent demand,
such as those supporting electric power equipment or petrochem-
ical machinery, incorporating contextual information into forecasts
seems to yield significant accuracy improvements over black-box
methods [32,101]. Similarly, installed base information can help es-
timate end-of-life demand for spare parts for consumer products
[103]. On the other hand, the added value of contextual informa-
tion can be limited for spare parts that are contained in many dif-
ferent components and have a highly intermittent demand with
sudden drops. The commercial aviation parts analyzed in Romei-
jnders et al. [75] are an example of such data (Fig. 14). They report
that SES performs as well as their proposed method, although the
22
Omega 105 (2021) 102513
latter takes additional (repair) information into account. They par-
tially attribute this counterintuitive result to the demand patterns
being very hard to forecast regardless of the method used.
For inventory performance, Van der Auweraer et al. [107] show
through a simulation study that combining maintenance, in-
stalled base, and reliability information can lead to improved cy-
cle service levels with lower inventory than those generated by
SBA, SES, and their variants. However, this is the only paper
in the literature investigating the inventory performance of in-
stalled base forecasting, and therefore, it is difficult to draw robust
conclusions.
6.2.7. Comparison of methods using data aggregation
Fig. 13a presents the overall results of the comparisons be-
tween the methods that use data aggregation and other techniques
that do not use any aggregation strategy (e.g., SES, Croston, SBA,
TSB). The results indicate that using an aggregation strategy gen-
erates more accurate forecasts than not using such a strategy in
66% of the comparisons. Moreover, Fig. 15 shows that aggrega-
tion over time performs particularly well for the military aviation
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

Fig. 15. Methods including data aggregation—Granular results by data type (accuracy measures).

data, which are characterized by high inter-demand interval vari- We have carried out similar analyses for the judgmental fore-
ance [22]. Aggregation over demand volume is found to perform casting and demand classification techniques; however, we skip
better for automotive data, which are characterized by erratic pat- the discussion of these analyses because they are not very infor-
terns and high demand-volume variance [69]. mative due to an insufficient number of papers.
Petropoulos and Kourentzes [73] also report that combinations
across forecasts derived from transformed frequencies using the
7. Conclusion
same single method or multiple methods is efficient and improves
forecasting performance. For spare parts with a strong hierarchi-
Extensive research has been conducted on spare parts demand
cal structure and lumpy demand patterns, such as those found in
forecasting since the publication of [3] seminal work. This pa-
complex weapons systems, a simple combination of forecasts with
per provides a critical review of this literature and a synthesis
quarterly aggregated data is found to generate the highest accuracy
of these research streams’ findings. We structured the literature
in most cases [71].
into three main categories (time-series forecasting methods, con-
Similar conclusions can be drawn regarding the inventory per-
textual forecasting methods, and comparative studies) and system-
formance of different aggregation strategies, although the results
atically reviewed the papers in each category by organizing them
are less clear. Fig. 13a shows that aggregation strategies result in
into smaller research streams. We then synthesized each research
higher inventory performance in 46% of the comparisons. Various
stream’s findings on the standard and new forecasting methods by
studies report that aggregation leads to higher service levels at a
carrying out a quantitative analysis of the performance results.
lower cost for erratic and lumpy spare parts demand and improves
Our analysis shows that the methods’ performances often vary
the inventory performance of simple methods such as SES [e.g.,
from one industrial dataset to another. Thus, there is no simple an-
68]. We refer the reader to Fig. A.4 in the Appendix for more gran-
swer to the question of when or why a particular intermittent de-
ular results on inventory measure comparisons.
mand forecasting method should be preferred. Furthermore, most
The value of combining forecasts from different methods has
previous research uses forecast accuracy measures as their perfor-
long been studied in the forecasting literature [e.g., [117–119]]. In
mance benchmarks despite inventory performance measures be-
a recent paper summarizing the findings of a well-known fore-
ing more practically relevant. This lack of standardization renders
casting competition, Makridakis et al. [120] states that “The most
a systematic comparison of methods difficult and widens the gap
important finding of the M4 Competition was that all of the top-
between research and practice. More effort is needed to develop a
performing methods, in terms of both point forecasts and pre-
more coherent research perspective that aims to close this gap.
diction intervals, were combinations of mostly statistical meth-
We find that data-intensive methods, such as neural networks
ods, with such combinations being more accurate numerically than
and installed base forecasting, have gained momentum in recent
either pure statistical or pure machine learning methods.” Simi-
years. This impulse, fueled by data analytics and business intel-
lar statements might be valid for spare parts demand forecasting
ligence trends, might evolve into the adoption of algorithmic ap-
as hinted by the papers reviewed above. Thus, more research is
proaches that harness big data and advanced computational tech-
needed to better understand when and how to use a portfolio of
niques, such as deep learning and artificial intelligence. These
methods while forecasting spare parts demand.
methods have been shown to work well in other supply chain

23
Ç. Pinçe, L. Turrini and J. Meissner
management contexts [e.g., 121,122], and testing them in the chal-
lenging terrain of spare parts demand forecasting could be a fertile
research field.
An underresearched topic is the role of judgmental adjustments
in spare parts demand management. Earlier work suggests that
practitioners are more likely to use judgmental methods in con-
texts characterized by high uncertainty [82]. Moreover, a limited
number of papers indicate that systematic judgmental adjustments
can improve forecast accuracy and stock control of spare parts.
Given the highly uncertain nature of spare parts demand, a more
in-depth investigation into how these benefits depend on demand
characteristics and the adjustment type seems to be a fruitful and
relevant research avenue.
Another overlooked topic is the link between installed base
forecasting and judgmental adjustments. Many B2C companies
have a vague idea about the number of end-of-life products for
which they are obligated to provide spare parts after these prod-
ucts become obsolete. While sales, returns, or warranty informa-
tion can be used to estimate the installed base’s size, human fore-
casters can intervene to adjust these estimates to incorporate ad-
ditional contextual information. Similar interventions are also pos-
sible in B2B contexts in which unstructured or unforeseen contex-
tual information about the installed base requires forecasters to in-
tervene with quantitatively generated forecasts. Thus, a potential
future research direction would be to examine when and how hu-
man forecasters should intervene to incorporate such information
into installed base forecasting.
Interactions between supply chain partners in the spare parts
management context is another future research avenue. Forecast
collaboration schemes between suppliers and retailers have been
shown to improve forecast accuracy for retail supply chains [123];
however, there are no studies in the literature that investigate the
value of information sharing in spare parts supply chains. The re-
search on demand classification can also be extended by bring-
ing in new methodologies from the unsupervised learning disci-
Fig. A.1. Year-by-year evolution of the spare parts demand forecasting literature.
24
Omega 105 (2021) 102513
pline. For example, clustering and anomaly detection algorithms
can help to classify data patterns into more granular clusters
and detect outliers. Detecting demand outliers caused by planned
maintenance tasks in industrial datasets is a difficult problem.
These newer methods can help to better match the data type with
the most appropriate forecasting method. Also, more research is
needed to better understand the value of forecast combinations
for spare parts demand forecasting. As evidenced in the forecast-
ing literature, such combinations can consistently outperform the
forecasts generated by pure methods [120].
Finally, we believe a few insights would be useful to stream-
line the reporting of future comparative spare parts demand fore-
casting papers. Based on our analysis, we conclude that inven-
tory and accuracy measures should be used together to provide a
complete picture of the performances of various forecasting meth-
ods. As testified by many studies, accuracy and inventory measures
can lead to different performance results with the same methods
and datasets. Also, standard performance measures (as reported in
Figs. 4 and 5) should be preferred. If new measures are introduced,
they should be used along with the standard measures. The indus-
trial datasets should be presented with an adequate amount of in-
formation such as the types of industry and spare parts, number
of SKUs, number of demand periods, and descriptive statistics. Sta-
tistical significance tests should be carried out for all performance
comparisons. For example, a common method of comparing inven-
tory performances of different methods is to use tradeoff curves;
however, the statistical significance of the differences among these
curves is usually missing in comparative studies. Considering that
multiple methods often yield close or crossing tradeoff curves, a
more objective comparison procedure is needed.
Appendix
Figs. A1–A4
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Table A.1
Summary of the papers included in the quantitative literature analysis.

Performance comparison† # Datasets Ind. dataset type‡

Paper A B C D E F G H I J L Ind. Sim. Spare Other

Altay et al (2008) x x 1 16 x
Babai et al (2012) x x x x 1 0 x
Babai et al (2014) x x x x x 2 0 x
Babai et al (2019) x x x x x 2 8 x
Boutselis and McNaught (2019) x 0 18
Boylan and Syntetos (2007) x x 0 4
Boylan et al (2008) x 3 0 x
Croston (1972) x 0 1
Dombi et al (2018) x 1 0 x
do Rego and de Mesquita (2015) x x x 1 0 x
Eaves and Kingsman (2004) x x x 1 0 x
Fricker and Goodhart (2000) x x 1 0 x
Ghobbar and Friend (2003) x 1 0 x
Gutierrez et al (2008) x x x x 1 0 x
Hasni et al (2019a) x x 2 0 x x
Hasni et al (2019c) x x 1 24 x
Hellingrath and Cordes (2014) x 1 0 x
Hua et al (2007) x x x 1 0 x
Jiang et al (2020) x x 1 0 x
Kim et al (2017) x 1 0 x
Kocer (2013) x x x 1 0 x
Kourentzes(2013) x x x x x x 0 1
Li and Lim (2018) x x x x x x 1 0 x
Lolli et al (2017) x 1 0 x
Moon et al (2012) x 1 0 x
Mukhopadhyay et al (2012) x x x 1 0 x
Nikolopoulos et al (2011) x x 1 0 x
Pennings et al (2017) x x x x x x x 5 0 x
Petropoulos and Kourentzes (2015) x x x x x 1 0 x
Petropoulos et al (2014) x x x x x 0 1
Petropoulos et al (2016) x x x x x 2 2 x
Porras and Dekker (2008) x x 1 0 x
Prestwich et al (2014) x x x 0 4
Regattieri et al (2005) x 1 0 x
Romeijnders et al (2012) x x x x x x 1 81 x
Sani and Kingsman (1997) x 0 1
Snyder (2002) x x 1 0 x
Snyder et al (2012) x 1 0 x
Syntetos and Boylan (2001) x 0 20
Syntetos and Boylan (2005) x x x 1 0 x
Syntetos and Boylan (2006) x x x 1 0 x
Syntetos et al (2009) x 1 0 x
Syntetos et al (2015b) x x x x 2 0 x x
Teunter and Duncan (2009) x x x x 1 0 x
Teunter and Sani (2009) x x x 0 48
Teunter et al (2011) x x x x x 0 12
Turrini and Meissner (2019) x x x 1 0 x
Van der Auweraer and Boute (2019) x x 0 4
van Wingerden et al (2014) x x x x x x x 2 0 x
Varghese and Rossetti (2008) x x x 1 0 x
Wang and Syntetos (2011) x 0 30
Willemain et al (1994) x 4 12 x x
Willemain et al (2004) x x 9 0 x
Zhou and Viswanathan (2011) x 1 81 x
Zhu et al (2017) x x x 2 3 x
Zhu et al (2020) x x x x x x 2 0 x
†
A: Croston vs. SBA. B: Croston vs. traditional methods. C: SBA vs. traditional methods. D: Croston vs. newer parametric methods. E: SBA
vs. newer parametric methods. F: Willemain vs. newer nonparametric methods. G: parametric vs. nonparametric methods. H: installed
base information included. I: data aggregation. J: judgemental forecasting. L: demand classification. ‡ This column indicates whether the
industrial datasets used in comparative studies include spare parts or another type of data.

25
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

Fig. A.2. SBA vs. classic methods—Granular results by data type.

26
Ç. Pinçe, L. Turrini and J. Meissner Omega 105 (2021) 102513

Fig. A.3. SBA vs. newer methods—Granular results by data type.

27
Ç. Pinçe, L. Turrini and J. Meissner
Fig. A.4. Methods including data aggregation—Granular results by data type (inventory measures).
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