Bombardier Aftermarket Demand Forecast with Machine Learning
42 Pages Posted: 8 Nov 2021 Last revised: 3 Jun 2022
Date Written: November 5, 2021
Intermittent demand patterns are commonly present in business aircraft spare-parts supply chains. Due to the infrequent arrivals and large variations in demand, aircraft aftermarket demand is difficult to forecast, which often leads to shortages or overstocking of spare parts. In this paper, we present the development and implementation of an advanced analytics framework at Bombardier Aerospace which is carried out by the Bombardier inventory planning team and IVADO Labs to improve the aftermarket demand forecasting process. This integrated predictive analytics pipeline leverages machine-learning (ML) models as well as traditional time-series models in a single framework in a systematic fashion. We also make use use of a tree-based machine-learning method, with a large set of input features, to estimate two components of intermittent demand, namely demand sizes and inter-demand intervals. Through the ML models, we incorporate different features including those derived from flight data. Outputs of different forecasting models are combined using an ensemble technique that enhances the robustness and accuracy of the forecasts for different groups of aftermarket spare parts categorized by demand patterns. The validation results show an improvement in forecast accuracy of approximately 7% and in unbiased forecast of 5%. The ML-based Bombardier Aftermarket forecasting system has been successfully deployed and used to forecast the aftermarket demand at Bombardier of more than 1 billion dollars on a regular basis.
Keywords: Demand forecasting, machine learning, spare parts, aftermarket, forecast ensemble
JEL Classification: C53, L62
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