On a myth in supply chain management

Journal of Japan Industrial Management Association, 59, 431-436.

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Abstract

By using a stochastic supply chain modelling technique this research addresses the myth that more accurate forecast always yields better supply chain performance. A serially linked two-level supply chain model is established to quantify the impact of forecast accuracy on the inventory and production cost in the supply chain. It is suggested that accurate forecasts do not always bring benefit to the supply chain. Instead, for most cases, the total supply chain cost will go up, due to a cost increase at the second level, even though the cost at the first level will decrease.