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On the effect of non-optimal forecasting methods on supply chain downstream demand. (English) Zbl 1248.90016
Summary: 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.

MSC:
90B06 Transportation, logistics and supply chain management
62P20 Applications of statistics to economics
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