The Effects of the Correlation of Electric Materials on Forecasting and Stock Control

Abstract

Forecasting and stock control play an important role in the electric companies because outstanding forecasting and stock control increase service level obviously and decrease stock cost effectively. However, the majority of the electric materials are intermittent demand, resulting in poor forecasting and stock control performance. Therefore, exploring the reasons that affect forecasting performance and stock control is necessary. This paper explores the effects of the correlation of intermittent electric materials on forecasting and stock control. First, we divide the correlation into three categories: autocorrelation in demand sizes, autocorrelation in intervals and cross-correlation between demand size and interval. Forecasting by SBA approach and using periodic dynamic inventory strategy (T, S) to control stock, exploring the effects of these three correlations on forecast accuracy, stock cost and service level. The data shows that correlations of electric materials affect their forecasting and stock control, which will help company find more accurate forecast approach and lower the cost of stock in the future.