TY - JOUR

T1 - On the effect of non-optimal forecasting methods on supply chain downstream demand

AU - Ali, M. M.

AU - Boylan, John

N1 - Accepted February 9th 2011

PY - 2012/1/1

Y1 - 2012/1/1

N2 - Demand information sharing is used by many organizations to counter the bullwhip effect. A stream of recent papers claims that the upstream member can mathematically infer the demand at the downstream link (downstream demand inference [DDI]) without any formal information sharing mechanism. In this paper, we investigate DDI when non-optimal forecasting methods are employed by supply chains. We show that in the case of a simple moving average forecast, the demand at the downstream link can be inferred. In the case of single exponential smoothing (SES), downstream demand cannot be inferred and thus needs to be shared. Finally, we quantify the value of sharing demand information when SES is employed.

AB - Demand information sharing is used by many organizations to counter the bullwhip effect. A stream of recent papers claims that the upstream member can mathematically infer the demand at the downstream link (downstream demand inference [DDI]) without any formal information sharing mechanism. In this paper, we investigate DDI when non-optimal forecasting methods are employed by supply chains. We show that in the case of a simple moving average forecast, the demand at the downstream link can be inferred. In the case of single exponential smoothing (SES), downstream demand cannot be inferred and thus needs to be shared. Finally, we quantify the value of sharing demand information when SES is employed.

KW - supply chain management

KW - bullwhip effect

KW - downstream demand inference

KW - forecast information sharing

KW - single exponential smoothing

KW - simple moving average

U2 - 10.1093/imaman/dpr005

DO - 10.1093/imaman/dpr005

M3 - Journal article

VL - 23

SP - 81

EP - 98

JO - IMA Journal of Management Mathematics

JF - IMA Journal of Management Mathematics

SN - 1471-678X

IS - 1

ER -