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Product demand risk management model based on empirical forecasting: consumer electronics product case

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  • Kenji Tanaka

Abstract

Producers continually need to determine how much of a particular product to produce. As market globalisation has changed their business, their demand uncertainty has become too big and too complex to manage. This study proposes a product's quantitative risk measurement and management model based on empirical sales forecasting. By introducing the concept of two time points of a product's lifecycle, two types of risks – the chance loss and the surplus loss caused by demand uncertainty – are defined. It provides a proposed volume under their risk-taking strategies even just after its release. Using a case study, this model is applied to consumer electronics device production planning and verifies how it works. This model proved to be able to provide optimised supply volume option and reduced product local risk compared with what is actually being done.

Suggested Citation

  • Kenji Tanaka, 2011. "Product demand risk management model based on empirical forecasting: consumer electronics product case," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 5(2/3), pages 221-233.
    • Handle: RePEc:ids:ijrevm:v:5:y:2011:i:2/3:p:221-233
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