Different Stock Keeping Units (SKUs) are associated with different demand patterns, which in turn require different methods for forecasting and stock control. Consequently, we need to categorise the various SKUs and apply the most appropriate methods for each particular category. The way we are going to perform this task has obviously tremendous implications in terms of stock and customer satisfaction and, as such, the relevant rules constitute a vital element of every inventory management system. To deal with this problem people tend to classify, rather arbitrarily, the demand patterns (using rules that, based on experience, work well) and then select the forecasting and stock control methods that perform best in each category. Nevertheless, the choice of the most appropriate forecasting and inventory control methods is the very purpose of conducting any categorisation exercise. Therefore, it is more logical to first compare alternative estimation procedures and stock control models for the purpose of identifying their regions of superior performance and then, based on the results, categorise the demand patterns, rather than working the other way around. A procedure like this one is obviously expected to offer better results. In research conducted with John Boylan and John Croston we developed a theoretically coherent categorisation scheme, along the lines discussed above, for forecasting purposes only. However, stock control issues were not addressed and this is what I would like to do in this proposed research. This research area has attracted very limited academic attention over the years. A reason for that may well be the considerable associated complexity. That is, forecasting and stock control have to be viewed as interrelated functions (as they are in practice) rather than stand-alone modules of a wider solution, and this obviously increases the theoretical complexity of the problem. Although some early work has been done on the interaction between forecasting and stock control, a theoretically coherent approach is still required and this is the first proposal to provide it.The main objective of this research is to produce theoretically sound demand categorisation rules for both forecasting and stock control purposes. To conduct such a project, the input from industry practitioners is very important. In this regard, two companies have been selected as project partners. This collaboration will also ensure that the empirical data required for the purposes of this research becomes available. My philosophical stand-point is positivistic in the sense that universally applicable categorisation solutions are sought to be developed. However, due to the complexity of the problem, the research strategy employed cannot be purely deductive. An iterative procedure between theory and data is to be introduced and such an approach will ensure that all important factors are identified.In summary, the proposed research deals with an issue that is worth investigating from both a theoretical and practitioner perspective. Very little work has been conducted in the area of demand categorisation and, from the research to date, it is not clear how managers should classify demand patterns for forecasting and stock control purposes. The importance of this issue has been reported on numerous occasions, and what is agreed upon in the relevant literature is the immediate need to further advance knowledge in this area and empirically assess the relevant issues. The proposed research therefore constitutes a very timely project. The results of such a project will find application in all forecasting and stock control software package manufacturers. Indeed, there is also a natural application to any industrial setting where an in-house developed or bought-in demand classification computerised solution is in place to facilitate inventory management.

This proposal sets out the terms for the continuation funding for the IMRC at Imperial College. All objectives, research plans and beneficiaries information has previously been approved though the 3rd year review of the existing Centre.

The Innovative Manufacturing and Construction Research Centre (IMCRC) will undertake a wide variety of work in the Manufacturing, Construction and product design areas. The work will be contained within 5 programmes:1. Transforming Organisations / Providing individuals, organisations, sectors and regions with the dynamic and innovative capability to thrive in a complex and uncertain future2. High Value Assets / Delivering tools, techniques and designs to maximise the through-life value of high capital cost, long life physical assets3. Healthy & Secure Future / Meeting the growing need for products & environments that promote health, safety and security4. Next Generation Technologies / The future materials, processes, production and information systems to deliver products to the customer5. Customised Products / The design and optimisation techniques to deliver customer specific products.Academics within the Loughborough IMCRC have an internationally leading track record in these areas and a history of strong collaborations to gear IMCRC capabilities with the complementary strengths of external groups.Innovative activities are increasingly distributed across the value chain. The impressive scope of the IMCRC helps us mirror this industrial reality, and enhances knowledge transfer. This advantage of the size and diversity of activities within the IMCRC compared with other smaller UK centres gives the Loughborough IMCRC a leading role in this technology and value chain integration area. Loughborough IMCRC as by far the biggest IMRC (in terms of number of academics, researchers and in funding) can take a more holistic approach and has the skills to generate, identify and integrate expertise from elsewhere as required. Therefore, a large proportion of the Centre funding (approximately 50%) will be allocated to Integration projects or Grand Challenges that cover a spectrum of expertise.The Centre covers a wide range of activities from Concept to Creation.The activities of the Centre will take place in collaboration with the world's best researchers in the UK and abroad. The academics within the Centre will be organised into 3 Research Units so that they can be co-ordinated effectively and can cooperate on Programmes.