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Impact of market demand mis-specification on a two-level supply chain

Hosoda, Takamichi and Disney, Stephen Michael 2009. Impact of market demand mis-specification on a two-level supply chain. International Journal of Production Economics 121 (2) , pp. 739-751. 10.1016/j.ijpe.2009.04.024

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This paper investigates the impact of mis-specifying the market demand process on a serially linked two-level supply chain. Box–Jenkins models are used to represent both the true and a mis-specified market demand processes. It is shown that the impact of mis-specification on cost is minor if the supply chain tries to minimise the market demand forecast errors. Furthermore, our analysis suggests that mis-specification does not always result in additional costs. A managerial insight is revealed; poor forecast accuracy is not always bad for the total supply chain costs. In other words, employing more accurate forecasting methods may actually result in higher total supply chain costs.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Centre for Advanced Manufacturing Systems At Cardiff (CAMSAC)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HG Finance
Uncontrolled Keywords: Order-up-to policy; Base-stock policy; Mis-specification; Forecasting; Box–Jenkins model
Publisher: Elsevier
ISSN: 0925-5273
Last Modified: 10 Mar 2020 17:18

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