Forecasting Intermittent Demand Based On Grey Theory

A majority of the range of products held by stockists exhibit intermittent demand. Products with intermittent demand are usually very important for enterprises, wholesalers and retailers. Since excess inventory leads to high holding costs and stock outs can have a great impact on operations performance, there is great need for accurate demand forecasting in inventory management. However, intermittent demand, which appears at random with some time periods having no demand at all, is especially difficult to forecast for its available demand history is usually very short. Several methods have been developed, but most based on one or some specific assumption. This paper uses a new approach based on Grey Theory to address the issue without any assumption. And it is proved that this method does well in forecasting intermittent demand.