Search Results for: martingale

I learned actuarial methods working for the USAF Logistics Command. We used actuarial rates to forecast demands and recommend stock levels for expensive engines tracked by serial number, hours, and cycles. I had a hunch that actuarial methods could be applied to all service parts, without life data. [Read more…]

In the 1960s, my ex-wife’s father set safety stock levels and order quantities for Pep Boys. He used part sales rates and the Wilson square-root formula to set order quantities. 

Why not use the ages of the cars into which those parts go, to forecast part sales and recommend stock levels? Imagine you had vehicle counts (year, make, model, and engine) in the neighborhoods of parts stores, catalogs of which parts and how many go into which cars, and store sales by part number.

How to allocate subsystems’ MTBF requirements with testing? Name-withheld-to-protect-the- guilty proposed “Top-Down” reduction in subsystem MTBF requirements; the more subsystems (in series) that you test, the lower the subsystem required MTBF! “The correct formula is

1/MTBF(subsystem requirement) = 1/MTBF(system requirement) –
((# of subsystems in series – # of subsystems tested)/MTBF(subsystem).”

This “Top-Down…” method is uncited and not found in Internet search. 

Reliability-based forecasts can be made from field data on complaints, failures, repairs, age-replacements (life limits), NTFs (no trouble found), WEAP (warranty expiration anticipation phenomenon), spares, warranty claims, or deaths. Some spares inventory forecasting software says… “Please enter forecast______” No kidding. 1800 years ago Roman Jurist Ulpian made actuarial pension cost forecasts for retiring Roman Legionnaires. Would you like actuarial forecasts? Their distributions? Stock recommendations?

At my job interview, the new product development director, an econometrician, explained that he tried to forecast auto parts’ sales using regression. His model was 

sales forecast = Sb(s)*n(t-s) + noise; s=1,2,…,t,

where b(s) are regression coefficients to be estimated, n(t-s) are counts of vehicles of age t-s in the neighborhood of auto parts stores. The director admitted to regression analysis problems, because of autocorrelation among the n(t-s) vehicle counts, no pun intended. 

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