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Estimating a retailer's base stock level: an optimal distribution center order forecast policy

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  • B D Williams

    (Auburn University)

  • M A Waller

    (University of Arkansas)

Abstract

Errors in order forecasts are a salient source of inefficiencies in retail supply chains. Many operational decisions made by suppliers hinge on order forecasts, which typically are based solely on either order or point-of-sale (POS) history. Using a discrete-time formulation, this research demonstrates that if a supplier knows that a retailer is using a base stock policy, it should use that knowledge to forecast the retailer's orders, even if the supplier does not know the base stock level and/or have access to POS data.

Suggested Citation

  • B D Williams & M A Waller, 2011. "Estimating a retailer's base stock level: an optimal distribution center order forecast policy," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(4), pages 662-666, April.
    • Handle: RePEc:pal:jorsoc:v:62:y:2011:i:4:d:10.1057_jors.2010.55
    DOI: 10.1057/jors.2010.55
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