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Demand forecasting by temporal aggregation: Using optimal or multiple aggregation levels?
Lancaster University Management School Department of Management Science, Lancaster, United Kingdom.ORCID iD: 0000-0003-0211-5218
Cardiff Business School, Cardiff University, Cardiff, United Kingdom.
School of Strategy and Leadership, Faculty of Business and Law Coventry University, Coventry, West Midlands, United Kingdom.
2017 (English)In: Journal of Business Research, ISSN 0148-2963, E-ISSN 1873-7978, Vol. 78, p. 1-9Article in journal (Refereed) Published
Abstract [en]

Recent advances have demonstrated the benefits of temporal aggregation for demand forecasting, including increased accuracy, improved stock control and reduced modelling uncertainty. With temporal aggregation a series is transformed, strengthening or attenuating different elements and thereby enabling better identification of the time series structure. Two different schools of thought have emerged. The first focuses on identifying a single optimal temporal aggregation level at which a forecasting model maximises its accuracy. In contrast, the second approach fits multiple models at multiple levels, each capable of capturing different features of the data. Both approaches have their merits, but so far they have been investigated in isolation. We compare and contrast them from a theoretical and an empirical perspective, discussing the merits of each, comparing the realised accuracy gains under different experimental setups, as well as the implications for business practice. We provide suggestions when to use each for maximising demand forecasting gains. 

Place, publisher, year, edition, pages
Elsevier, 2017. Vol. 78, p. 1-9
Keywords [en]
Demand planning, Exponential smoothing, Forecasting, MAPA, Model selection, Temporal aggregation
National Category
Probability Theory and Statistics Production Engineering, Human Work Science and Ergonomics
Identifiers
URN: urn:nbn:se:his:diva-18245DOI: 10.1016/j.jbusres.2017.04.016ISI: 000405053800001Scopus ID: 2-s2.0-85020743178OAI: oai:DiVA.org:his-18245DiVA, id: diva2:1402237
Available from: 2020-02-28 Created: 2020-02-28 Last updated: 2020-02-28Bibliographically approved

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Kourentzes, Nikolaos

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