Utilizing an Intervention Forecasting Approach to Improve Reefer Container Demand Forecasting Accuracy: A Case Study in Indonesia

Abstract

The demand for reefer containers in Indonesia has been increasing due to both global and regional trade growth; however, logistics providers are still struggling with several related challenges, including a container shortage problem, which is due to ineffective forecasting practices. This study aimed to improve the accuracy of reefer container demand forecasting by introducing an intervention forecasting approach. This approach will help address the demand planning issue of reefer circulation. The intervention forecasting approach combines human insights from the qualitative approach with the mathematical precision of the quantitative approach in iterative sequences. This field study was conducted with an Indonesian third party logistic company in Eastern Indonesia. The training data set was analyzed to provide a pattern of demand as well as some initial forecasting parameters (such as trend and seasonal index). Then, an expert helped identify irregular demand points. The demand data was then adjusted by a sales and marketing manager according to related factors such as natural disasters, oil price increase, promotions. The selected models were then further verified using a testing dataset, and the forecast errors from various models using the raw and adjusted training data sets were compared with those of the testing datasets. The results revealed that the mean average percentage error (MAPE) after adjusting the demand was 5.43% to 6.22% for the training and 9.55% to 10.33% for the testing dataset, which is lower than that of the traditional forecasting method when there was no intervention. In summary, the adjustment forecast could increase forecast accuracy by 42.39% and 39.42% for 20- and 40-feet containers, respectively.

Keywords

• intervention
• qualitative forecasting method
• reefer containers
• third party logistics providers
• time series forecasting