Croston’s Forecasting Method

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Definition: Croston’s Forecasting Method

It is easier to predict demand when there’s a pattern. But in case of irregular or intermittent demand the simple technique of smoothing does not work.

Croston’s forecasting method is a standard approach to deal with intermittent demand. It detects the cyclic pattern of demand and divides the period into 2 time series:

  1. Zero demand values &
  2. Non zero demand values

Then demand smoothing is used on both time series separately and demand is forecasted.

 

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