Forecasting and inventory performance for a two-stage supply chain with ARIMA (0,1,1) demand : theory and empirical analysis

Babai, MZ; Ali, M; Boylan, JE; Syntetos, A

Abstract

The ARIMA(0,1,1) demand model has been analysed extensively by researchers and used widely by forecasting practitioners due to its attractive theoretical properties and empirical evidence in its support. However, no empirical investigations have been conducted in the academic literature to analyse demand forecasting and inventory performance under such a demand model. In this paper, we consider a supply chain formed by a manufacturer and a retailer facing an ARIMA(0,1,1) demand process. The relationship between the forecasting accuracy and inventory performance is analysed along with an investigation on the potential benefits of forecast information sharing between the retailer and the manufacturer. Results are obtained analytically but also empirically by means of experimentation with the sales data related to 329 Stock Keeping Units (SKUs) from a major European superstore. Our analysis contributes towards the development of the current state of knowledge in the areas of inventory forecasting and forecast information sharing and offers insights that should be valuable from the practitioner perspective.

Citation

Babai, M., Ali, M., Boylan, J., & Syntetos, A. (2011). Forecasting and inventory performance for a two-stage supply chain with ARIMA (0,1,1) demand : theory and empirical analysis. International Journal of Production Economics, 143(2), 463-471. https://doi.org/10.1016/j.ijpe.2011.09.004

• Journal Article Type: Article
• Online Publication Date: Sep 9, 2011
• Publication Date: Sep 9, 2011
• Deposit Date: Oct 14, 2011
• Journal: International Journal of Production Economics
• Print ISSN: 0925-5273
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 143
• Issue: 2
• Pages: 463-471
• DOI: https://doi.org/10.1016/j.ijpe.2011.09.004
• Publisher URL: http://dx.doi.org/10.1016/j.ijpe.2011.09.004
• Related Public URLs: http://www.sciencedirect.com/science/journal/09255273/143/2