DTIC ADA285299: Evaluation of Air Force and Navy Demand Forecasting Systems

148 Pages·5.9 MB·English

by  Defense Technical Information Center

AFIT/GLM/LAIJ95M- 1
L0)n
ELE&.E
L E.
_(cid:127)
CNI OCT 06 1994
F
EVALUATION OF
AIR FORCE AND NAVY DEMAND
FORECASTING SYSTEMS
THESIS )
Christian J.H. Dussault, B.S.
AFIT/GLM/LAIJ95M-I
Approved for public release; distribution unlimited
'@(cid:127)94-31676
Li*-% l IriIllIIIIIII IIIIr l
a
The views expressed in this thesis are those of the authors
and do not reflect the official policy or position of the
Department of Defense or the U.S. Government.
"Accesion For
NTIS :;
. . .......... ..... .. . "...
a- Dis t ti ...........
Dist I £(cid:127) .:a
i • • 1
AFIT/GLM/LALI95M- 1
EVALUATION OF AIR FORCE
AND NAVY DEMAND FORECASTING SYSTEMS
THESIS
Presented to the Faculty of the Graduate School of Logistics and Acquisition Management
of the Air Force Institute of Technology
Air University
In Partial Fulfillment of the
Requirements for the Degree of
Master of Science in Logistics Management
Christian J.H. Dussault, B.S.
Captain, Canadian Armed Forces
March 1995
Approved for public release; distribution unlimited
Preface
The purpose of this study was to perform a comparison between the Navy
Statistical Demand Forecasting system and the Air Force Requirements Data Bank
forecasting system. The results of this research may help the Air Force managers and the
Joint Logistics System Center managers to obtain a better understanding of the
implications in using one system versus the other.
An extensive search of existing literature was conducted to gain an understanding
of the basic algorithms of each system. A simulation model of the Requirements Data
Bank system was developed to generate Air Force forecasts. The actual Statistical
Demand Forecasting system was used to generate Navy forecasts.
The completion of this research would not have been possible without the help of
several people to whom I am deeply indebted. I would like to thank my advisor, Major
Terrance Pohlen, for his knowledgeable advice, patience, inspiration and guidance
throughout the process.
I would like to thank my other advisor, Dr. Craig Brandt, for his continuing
support while I was pursuing my course work as a part time student.
The completion of this thesis is due primarily to Mr. Victor Presutti, Mr. Curt
Neumann, and every one of my co-workers who have, in some way or another, provided
me with some assistance in completing my thesis.
I would also like to thank my sponsor, Mr. Jean-Guy Mathieu, for believing in me
and sending me to the US Air Force Materiel Command as a Canadian Exchange Officer.
Most of all, I am forever grateful to every member of my family for their
unwavering love and support.
Christian J.H. Dussault
, !i
Table of Contents
Page
Preface ..................................................... ii
List of Figures ................................................ vii
List of Tables ................................................ viii
A bstract .................................................... ix
I. Introduction ............................................... 1-1
General Issue ..................................... 1-1
Background ..................................... 1-1
Specific Problem .................................. 1-3
Purpose of the Study ............................... 1-4
Contributions and Implications for DOD Managers ......... 1-4
Research Questions ................................ 1-5
Research Hypothesis ............................... 1-6
Research Approach ................................ 1-7
Scope and Limitations ............................... 1-7
Reparable Items ............................ 1-8
Population Size and Sample Size ................ 1-8
Forecasting Techniques ....................... 1-9
Assum ptions ..................................... 1-9
Chapter Summary and Organization of the Research ....... 1-10
H. Literature Review ........................ .................. 2-1
Introduction ...................................... 2-1
Magnitude of the Air Force Reparable Items Inventory ...... 2-1
Time Series Components ............................. 2-2
Forecasting Techniques .............................. 2-4
M oving Average ............................. 2-5
Exponential Smoothing ........................ 2-5
Double Exponential Smoothing .................. 2-6
Linear Regression ............................ 2-7
Recoverable Consumption Item Requirements System (D041). 2-7
Requirement Data Bank System ........................ 2-9
Introduction ................................. 2-9
Replacement of Existing Systems by RDB .......... 2-10
RDB Sub-systems ............................ 2-10
iii
Page
RDB Recoverable Item Sub-system ............... 2-10
RDB Moving Average ................... 2-13
RDB Double Exponential Smoothing ......... 2-13
RDB Predictive Logistics ................. 2-14
Statistical Demand Forecasting System ................... 2-15
Module 0 - Administrative Lead-time .............. 2-16
Module I - Time Forecasts .................... 2-17
Module 2 - Rates Forecasts ..................... 2-18
Module 3 - Filters and Trends .................... 2- 19
Demand Filters Test ..................... 2-20
Stability Region .................. 2-20
Instability Region ................. 2-21
Outlier Region .................. 2-21
Trending Test ......................... 2-23
Bias Tests ............................ 2-24
Runs Test ...................... 2-25
Cumulative Error Tests ............ 2)2-26
Student Confidence Interval Test ..... 2-2/
Module 4 - Quantity Forecasts ................... 2-27
Module 5 -Procurement Problem Variable Forecast... 2-27
Chapter Summary .................................. 2-28
III. M ethodology .............................................. 3-1
Introduction ....................................... 3-1
Type of Research Design ............................. 3-1
Research Questions ................................. 3-3
Research Question I ........................... 3-3
Research Question II .......................... 3-4
Research Question III ......................... 3-4
Research Hypotheses ................................ 3-4
Instrum ents ........................................ 3-6
Forecasting Error Measurements ................. 3-6
Mean Absolute Deviation ................. 3-7
Mean Square Eiror ..................... 3-7
Mean Absolute Percentage Error ........... 3-7
Mean Percentage Error .................. 3-8
Student Paired Difference Test ................... 3-9
Aircraft Sustainability Model ..................... 3-9
Analytical Approaches ............................... 3-11
Approach One ............................... 3-11
Approach Two ............................... 3-13
iv
Page
Approach Three .............................. 3-14
Population Size ..................................... 3-16
Sample Size and Data Collection ....................... 3-17
Sample Size for Air Force Data .................. 3-17
Variance-to-Mean Ratio ................. 3-18
Sample Sizes for Time Series Components .......... 3-20
Implementation of the Research Design .................. 3-20
Phase O ne .................................. 3-20
Phase Two .................................. 3-21
Phase Three ................................. 3-22
Chapter Summary .................................. 3-23
IV. Results and Analysis ......................................... 4-1
Introduction ...................................... 4-1
Approach One -Time Series Components Results ........... 4-1
Requirements Data Bank Results .................. 4-2
Trend ................................ 4-2
Seasonal .............................. 4-3
C yclical ............................... 4-3
Random .............................. 4-3
O utlier ............................... 4-4
Statistical Demand Forecasting Results .............. 4-4
Trend ................................ 4-4
Seasonal .............................. 4-5
Cyclical ............................... 4-5
Random .............................. 4-5
O utlier ............................... 4-6
Comparative Results of Approach One ............. 4-6
Trend ................................ 4-6
Seasonal .............................. 4-7
Cyclical ............................... 4-8
Random .............................. 4-8
O utlier ............................... 4-9
Approach Two - Actual Air Force Data Results ............. 4-10
Requirements Data Bank Results .................. 4-11
Statistical Demand Forecasting Results .............. 4-12
Comparative Results of Approach Two ............. 4-12
Approach Three - Aircraft Availability Results .............. 4-13
Requirements Data Bank Results .................. 4-14
Statistical Demand Forecasting Results .............. 4-14
Comparative Results of Approach Three ............ 4-15
V
Page
Chapter Summary ................................... 4- it
V. Conclusion and Recommendation ................................ 5-1
Introduction ........................................ 5-1
Specific Problem ..................................... 5-1
Purpose of the Study .................................. 5-1
Research Questions ................................... 5-2
Results and Management Implication for Research Question One. 5-2
Forecast Accuracy Results for Time Series Components.. 5-2
Management Implication .......................... 5-3
Results and Management Implication for Research Question Two. 5-4
Forecast Accuracy Results for Actual Air Force Data ..... 5-4
Management Implication .......................... 5-4
Results and Management Implication for Research Question Three. 5-4
Aircraft Availability Results ........................ 5-5
Management Implication .......................... 5-5
Observations on the Forecasting Systems ................... 5-5
Requirements Data Bank System ................... 5-6
Statistical Demand Forecasting System ............... 5-7
Recommendations For Future Studies and Analyses ............ 5-9
Conclusions ......................................... 5-10
Research Summary .................................... 5-10
Appendix A: Times Series Components Generator Programs ............... A- I
Appendix B: Sample Sizes Computation ............................... B- I
Appendix C: RDB Eight Quarter Moving Average ........................ C-1
Appendix D: Data Elements for SDF and RDB .......................... D- 1
Appendix E: Aircraft Sustainability Data Values .......................... E- 1
Appendix F: Forecasting Measurement Errors Results ..................... F-I
Appendix G: Aircraft Availability Results ............................... G- 1
Bibliography .................................................... B 1B - I
V ita .......................................................... V ita- I
vi
List of 'e
Figure Page
1-1. Joint Logistic System s ..................................... 1-2
2-1. Time Series Components .................................. 2-3
2-2. Repair Turn-Around-Time ................................. 2-18
2-3. SDF Statistical Control Chart - Filters Test ..................... 2-20
2-4. Demand Filters Tes ....................................... 2-23
2-5. Demand Trending ........................................ 2-24
2-6. R uns Test ............................................... 2-25
3-1. Variance-to-Mean Ratio of the Recoverable Items Population Size .... 3-19
3-2. Variance-to-Mean Ratio of the Recoverable Items Sample Size ....... 3-19
vii
Table Page
2-1. Landing Gear Demands ................................... 2-8
2-2. Current Air Force Systems Replaced by RDB .................. 2- 11
2-3. RD B Sub-system s ....................................... 2-12
3-1. Paired Difference Test ..................................... 3-9
3-2. Design of Analytical Approach One.......................... 3-12
3-3. Design of Analytical Approach Two .......................... 3-14
3-4. Design of Analytical Approach Three ......................... 3- 16
4-1. RDB Forecasting Errors With Time Series Components ............ 4-2
4-2. SDF Forecasting Errors With Time Series Components ............ 4-4
4-3. Trend Paired Difference Test ............................... 4-7
4-4. Seasonal Paired Difference Test ............................. 4-7
4-5. Cyclical Paired Difference Test .............................. 4-8
4-6. Random Paired Difference Test ............................. 4-9
4-7. Outlier Paired Difference Test ............................... 4-10
4-8. RDB Forecasting Errors With Air Force Data .................... 4- 11
4-9. SDF Forecasting Errors With Air Force Data .................... 4-12
4-10. Air Force Data Paired Difference Test ......................... 4-13
4-11. RDB Aircraft Availability ................................... 4-14
4-12. SDF Aircraft Availability ................................... 4-15
4-13. Aircraft Availability Paired Difference Test ...................... 4-15
viii