Li-Ting Huang

On ordering adjustment policy under rolling forecast in supply chain planning

Rolling forecast is a useful tool for lowering total cost with regard to practical inventory management. The details regarding a rolling forecast are obtained from a customers projected ordering data. The customer estimation of a rolling forecast may deviate from actual orders because of unstable conditions or customers deliberation. This study investigates what measures a customer might apply in responding to a situation where the rolling forecast deviates from the actual order. In addition, an appropriate ordering adjustment policy is proposed for better monitoring the supply chain performance with regard to a variant level of error concerning rolling forecast data. This study also considers the influence of lead time and inventory cost structure. We adopted a simulation approach, employing a model developed and examined in several different settings. The proposed ordering adjustment policies are determined by AVG, SD, and RMSE calculated from differences existing between historical forecasts and realized data. Levels of estimate error and estimate bias in a rolling forecast are included in the experimental procedure. Results reveal that the RMSE ordering adjustment policy is the most effective in situations of normal and downside estimation bias, whereas the AVG policy is more appropriate in the case of upside estimation bias. The level of estimation error is irrelevant to the selection of ordering adjustment policies, but it is positively associated with inventory costs. Stock-out costs and lead time are positively associated with inventory costs. Accuracy of the rolling forecast is therefore deemed to be essential in a situation involving a long lead time with high stock-out costs.

The Influence of Inertia on Supply Chain Partner Selection

”Choosing a suitable partner” is one of the critical success factors in the process of supply chain management, especially in a long-term relationship. This study employs the resource dependence perspective and the inertia perspective as lenses to investigate information collection behavior in supply chain partner selection that can lead to satisfactory outcome for the collaboration. The results show that inertia is negatively associated with information collection behavior, which in turn associates positively with outcome of the alliance. The finding reveals that firms tend to devote resources to information collection, rather than organizational and personal inertia if high uncertainty is perceived. Consequently, we suggest that in the context of high uncertainty, firms should overcome the limitations of inertia, then narrow the scope of information sources and enlarge the extent of information on evaluative criteria to gain a better outcome.