Supply chain forecasting when information is not shared

Article


Ali, M., Babai, M. Z., Boylan, J. E. and Syntetos, A. A. 2017. Supply chain forecasting when information is not shared. European Journal of Operational Research. 260 (3), pp. 984-994. https://doi.org/10.1016/j.ejor.2016.11.046
AuthorsAli, M., Babai, M. Z., Boylan, J. E. and Syntetos, A. A.
Abstract

The operations management literature is abundant in discussions on the benefits of information sharing in supply chains. However, there are many supply chains where information may not be shared due to constraints such as compatibility of information systems, information quality, trust and confidentiality. Furthermore, a steady stream of papers has explored a phenomenon known as Downstream Demand Inference (DDI) where the upstream member in a supply chain can infer the downstream demand without the need for a formal information sharing mechanism. Recent research has shown that, under more realistic circumstances, DDI is not possible with optimal forecasting methods or Single Exponential Smoothing but is possible when supply chains use a Simple Moving Average (SMA) method. In this paper, we evaluate a simple DDI strategy based on SMA for supply chains where information cannot be shared. This strategy allows the upstream member in the supply chain to infer the consumer demand mathematically rather than it being shared. We compare the DDI strategy with the No Information Sharing (NIS) strategy and an optimal Forecast Information Sharing (FIS) strategy in the supply chain. The comparison is made analytically and by experimentation on real sales data from a major European supermarket located in Germany. We show that using the DDI strategy improves on NIS by reducing the Mean Square Error (MSE) of the forecasts, and cutting inventory costs in the supply chain.

JournalEuropean Journal of Operational Research
Journal citation260 (3), pp. 984-994
ISSN0377-2217
Year2017
PublisherElsevier
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Anyone
Digital Object Identifier (DOI)https://doi.org/10.1016/j.ejor.2016.11.046
Publication dates
Online16 Jan 2017
Publication process dates
Accepted25 Nov 2016
Deposited08 Dec 2020
Copyright holder© 2016 The Authors
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