✦ LIBER ✦

The cost impact of using simple forecasting techniques in a supply chain

✍ Scribed by Heung-Kyu Kim; Jennifer K. Ryan

Publisher: John Wiley and Sons
Year: 2003
Tongue: English
Weight: 237 KB
Volume: 50
Category: Article
ISSN: 0894-069X
DOI: 10.1002/nav.10065

No coin nor oath required. For personal study only.

✦ Synopsis

Abstract

In this paper we consider an inventory model in which the retailer does not know the exact distribution of demand and thus must use some observed demand data to forecast demand. We present an extension of the basic newsvendor model that allows us to quantify the value of the observed demand data and the impact of suboptimal forecasting on the expected costs at the retailer. We demonstrate the approach through an example in which the retailer employs a commonly used forecasting technique, exponential smoothing. The model is also used to quantify the value of information and information sharing for a decoupled supply chain in which both the retailer and the manufacturer must forecast demand. © 2003 Wiley Periodicals, Inc. Naval Research Logistics 50: 388–411, 2003

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