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A COMPARISON OF ALTERNATIVE FORECASTING STRATEGIES FOR MULTI‐STAGE PRODUCTION‐INVENTORY SYSTEMS
Author(s) -
Miller Jeffrey G.,
Berry William L.,
Lai ChengYi F.
Publication year - 1976
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1976.tb00715.x
Subject(s) - successor cardinal , extrapolation , computer science , demand forecasting , operations research , production (economics) , inventory management , inventory control , econometrics , operations management , economics , microeconomics , mathematics , statistics , mathematical analysis
In multi‐stage production‐inventory systems, the demand for precursor items derives from the demand for successor items at the later stages in the system. This paper presents a method for evaluating the performance of two different strategies for forecasting the demand for precursor items. The dependent strategy relies on successor item forecasts to build a precursor item forecast, while the independent strategy relies on the extrapolation of past precursor demand. An expression indicating the conditions under which one strategy is preferred to the other is developed, and the effect of changing these conditions is illustrated with simulation results.