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

Mohammad M. Ali, John E. Boylan

Research output: Contribution to journalArticle

24 Citations (Scopus)

Abstract

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.
Original languageEnglish
Pages (from-to)81-98
Number of pages18
JournalIMA Journal of Management Mathematics
Volume23
Issue number1
Early online date25 Mar 2011
DOIs
Publication statusPublished - 2012

Keywords

  • supply chain management
  • bullwhip effect
  • Downstream Demand Inference
  • forecast information sharing
  • Single exponential smoothing
  • simple moving average

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