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Forecasting method selection in a global supply chain

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  • Acar, Yavuz
  • Gardner, Everette S.

Abstract

In supply chains, forecasting is an important determinant of operational performance, although there have been few studies that have selected forecasting methods on that basis. This paper is a case study of forecasting method selection for a global manufacturer of lubricants and fuel additives, products usually classified as specialty chemicals. We model the supply chain using actual demand data and both optimization and simulation techniques. The optimization, a mixed integer program, depends on demand forecasts to develop production, inventory, and transportation plans that will minimize the total supply chain cost. Tradeoff curves between total costs and customer service are used to compare exponential smoothing methods. The damped trend method produces the best tradeoffs.

Suggested Citation

  • Acar, Yavuz & Gardner, Everette S., 2012. "Forecasting method selection in a global supply chain," International Journal of Forecasting, Elsevier, vol. 28(4), pages 842-848.
    • Handle: RePEc:eee:intfor:v:28:y:2012:i:4:p:842-848
    DOI: 10.1016/j.ijforecast.2011.11.003
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    References listed on IDEAS

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    1. Everette S. Gardner, Jr. & Ed. Mckenzie, 1985. "Forecasting Trends in Time Series," Management Science, INFORMS, vol. 31(10), pages 1237-1246, October.
    2. Everette S. Gardner, 1990. "Evaluating Forecast Performance in an Inventory Control System," Management Science, INFORMS, vol. 36(4), pages 490-499, April.
    3. Hyndman, Rob J. & Koehler, Anne B., 2006. "Another look at measures of forecast accuracy," International Journal of Forecasting, Elsevier, vol. 22(4), pages 679-688.
    4. Syntetos, Aris A. & Nikolopoulos, Konstantinos & Boylan, John E., 2010. "Judging the judges through accuracy-implication metrics: The case of inventory forecasting," International Journal of Forecasting, Elsevier, vol. 26(1), pages 134-143, January.
    5. Snyder, Ralph D. & Koehler, Anne B. & Ord, J. Keith, 2002. "Forecasting for inventory control with exponential smoothing," International Journal of Forecasting, Elsevier, vol. 18(1), pages 5-18.
    6. Holt, Charles C., 2004. "Author's retrospective on 'Forecasting seasonals and trends by exponentially weighted moving averages'," International Journal of Forecasting, Elsevier, vol. 20(1), pages 11-13.
    7. Holt, Charles C., 2004. "Forecasting seasonals and trends by exponentially weighted moving averages," International Journal of Forecasting, Elsevier, vol. 20(1), pages 5-10.
    8. Sanders, Nada R. & Graman, Gregory A., 2009. "Quantifying costs of forecast errors: A case study of the warehouse environment," Omega, Elsevier, vol. 37(1), pages 116-125, February.
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    Citations

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    Cited by:

    1. Gardner, Everette S., 2015. "Conservative forecasting with the damped trend," Journal of Business Research, Elsevier, vol. 68(8), pages 1739-1741.
    2. Gardner, Everette Shaw & Acar, Yavuz, 2016. "The forecastability quotient reconsidered," International Journal of Forecasting, Elsevier, vol. 32(4), pages 1208-1211.
    3. Rostami-Tabar, Bahman & Babai, Mohamed Zied & Ducq, Yves & Syntetos, Aris, 2015. "Non-stationary demand forecasting by cross-sectional aggregation," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 297-309.
    4. Petropoulos, Fotios & Wang, Xun & Disney, Stephen M., 2019. "The inventory performance of forecasting methods: Evidence from the M3 competition data," International Journal of Forecasting, Elsevier, vol. 35(1), pages 251-265.
    5. Li, Qinyun & Disney, Stephen M. & Gaalman, Gerard, 2014. "Avoiding the bullwhip effect using Damped Trend forecasting and the Order-Up-To replenishment policy," International Journal of Production Economics, Elsevier, vol. 149(C), pages 3-16.
    6. Bahman Rostami‐Tabar & M. Zied Babai & Aris Syntetos & Yves Ducq, 2013. "Demand forecasting by temporal aggregation," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(6), pages 479-498, September.
    7. Heidary Dahooie, Jalil & Mohammadi, Navid & Daim, Tugrul & Vanaki, Amir Salar & Zavadskas, Edmundas Kazimieras, 2021. "Matching of technological forecasting technique to a technology using fuzzy multi-attribute decision-making methods: Case study from the aerospace industry," Technology in Society, Elsevier, vol. 67(C).
    8. Yavuz Acar, 2014. "Forecasting Method Selection Based on Operational Performance," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 28(1), pages 95-114.
    9. Acar, Yavuz & Atadeniz, Sukran Nilvana, 2015. "Comparison of integrated and local planning approaches for the supply network of a globally-dispersed enterprise," International Journal of Production Economics, Elsevier, vol. 167(C), pages 204-219.

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