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A new production approach for compensating forecast error and customer loss in waiting

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  • Chen Qian
  • Ching-Yuen Chan

Abstract

It is noticeable that forecast information is always subject to some deviations, but it helps reduce the product time-to-market. This is important as customer loyalty decreases as the waiting time becomes longer; thus, to have a balance between forecast error and customer loss becomes essential. This paper presents a production approach that aims at compensating the forecast error and the possible customer loss in waiting for either a product (or a service) to boost the profit. A novel model to tackle this scenario is presented. The results showed that it could offer a better production solution than the Make-To-Stock or the Make-To-Order approaches by starting the production sometime in between these two traditional approaches.

Suggested Citation

  • Chen Qian & Ching-Yuen Chan, 2015. "A new production approach for compensating forecast error and customer loss in waiting," International Journal of Production Research, Taylor & Francis Journals, vol. 53(5), pages 1325-1336, March.
    • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:5:p:1325-1336
    DOI: 10.1080/00207543.2014.918292
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