Simulation of Stochastic Rolling Horizon Forecast Behavior with Applied Outlier Correction to Increase Forecast Accuracy

Research output: Chapter in Book/Report/Conference proceedingsConference contributionpeer-review

2 Citations (Scopus)

Abstract

A two-stage supply chain is studied in this paper where customers provide demand forecasts to a manufacturer and update these forecasts on a rolling horizon basis. Stochastic forecast errors and a forecast bias, both related to periods before delivery, are modeled. Practical observations show that planning methods implemented in ERP (enterprise resource planning) systems often lead to instabilities in production plans that temporarily increase projected demands. From the manufacturer's point of view, this behavior is observed as an outlier in the demand forecast values. Therefore, two simple outlier correction methods are developed and a simulation study is conducted to evaluate their performance concerning forecast accuracy. In detail, the magnitude of each demand forecast is evaluated and if a certain threshold is reached, the forecast is corrected. The study shows that the application of the outlier correction for forecast values leads to significant forecast accuracy improvement if such planning instabilities occur.

Original languageEnglish
Title of host publication2021 Winter Simulation Conference, WSC 2021
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages1-12
Number of pages12
ISBN (Electronic)9781665433112
DOIs
Publication statusPublished - 2021
Event2021 Winter Simulation Conference, WSC 2021 - Phoenix, United States
Duration: 12 Dec 202115 Dec 2021

Publication series

NameProceedings - Winter Simulation Conference
Volume2021-December
ISSN (Print)0891-7736

Conference

Conference2021 Winter Simulation Conference, WSC 2021
Country/TerritoryUnited States
CityPhoenix
Period12.12.202115.12.2021

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