Short and sweet: Distribution-free methods 

Andreas Kemmner

In supply chain management, the term “distribution-free” procedures typically refers to special forecasting and, above all, safety stock procedures that enable reliable statements to be made even if the prerequisite of a normal distribution of demand for articles does not exist.

All classical methods for determining forecasts or safety stocks assume that the frequency distribution of the demand quantities for an article follows a Gaussian normal distribution. In practice, this is not the case for 80% to 90% of the articles. The more sporadically an item is demanded, the greater the probability that there is no normal distribution. In this case, distribution-free methods are an important lever for obtaining reliable forecast values and safety stocks.

Our tip:

You can pragmatically recognise whether the demand for an item deviates from the normal distribution by comparing the mean value of a demand time series with its median. If the median and the mean fall apart, there is definitely no normally distributed demand.

For sporadic items and for spare parts, you should definitely use distribution-free procedures, at least for safety stock calculations.

Andreas Kemmner

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Prof. Dr Kemmner has carried out well over 150 national and international projects in over 25 years of consultancy work in supply chain management and reorganisation.In 2012, he was appointed honorary professor for logistics and supply chain management by the WHZ.The results of his projects have already received several awards.

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