I’ve been acting as a reviewer lately, providing comments on papers about intermittent demand, and I’ve felt a bit frustrated by what some authors write. Let me explain.
Several papers I reviewed claim that demand can be either intermittent or lumpy. They then mention the Syntetos-Boylan-Croston (SBC) classification and use the thresholds from Syntetos et al. (2005: ) to do some things with ML methods. Sounds reasonable?
No! And here’s why.
Actually, I’ve already explained this in a previous post, but let me summarise the main points again.
First, intermittent demand is the demand that happens at irregular frequency. That’s the definition John Boylan and I came up with in our paper (this one). But even before that, the literature generally agreed: if you observe naturally occurring zeroes (e.g., no one wants to buy a product), then the demand is intermittent – even if there’s only one zero in the data.
Now, Syntetos et al. (2005) specifically studied intermittent demand and proposed a classification to help choose between Croston’s method and SBA. Their classification includes four types (see image in the post):
- Erratic but not very intermittent
- Smooth
- Lumpy
- Intermittent but not very erratic
The thresholds they used (ADI=1.32 and CV²=0.49) were only intended to guide the choice between Croston and SBA. And “lumpy”, as you can see, is just a special case of intermittent demand!
Yes, you can classify intermittent demand into “lumpy” and “smooth”, but this separation is not well-defined. Use a different classification (e.g., this paper) and you’ll get different results. In fact, practically speaking, your ML approach likely doesn’t need this classification at all.
So, here are a two things you should NOT DO:
- Saying that demand can be “intermittent” or “lumpy” – the latter is a subset of the former.
- Use ADI=1.32 and/or CV²=0.49 to categorise demand, unless you’re selecting between Croston and SBA. And let’s be honest, you’re probably not doing that. So forget about it!
And honestly, stop overusing SBC! Lately, I’ve seen more harm than good from it. If you really want to use it, make sure you’ve read carefully and understood the original paper.
But if you don’t know what you are doing, SBC is not for you!