The budget of demand forecasting in one-period seasonal goods production systems - a Bayesian approach
Authors: Chih-Ming Lee
Authors: Chih-Ming Lee
Journal: Chiao Da Management Review. Dec. 2004, 24(2): 37-60.
Keywords:Seasonal goods; Demand forecasting; Bayesian approach
Abstract:
Seasonal goods; Demand forecasting; Bayesian approach
Abstract: How to accurately predict and satisfy customer needs is very important for a company to survive. In general, the
precision of demand forecasting is closely relative to the budget invested in forecasting. In this paper, we develop a
single-product and single-period model (a newsboy model) with Bayesian approach to study how the decision-maker in a seasonal
goods production system to determine the production quantity and budget invested in demand forecasting. We find that when
unit selling price, unit inventory disposal cost, or unit shortage cost is larger, or when unit production cost is
appropriate, or when production setup cost is smaller, demand forecasting becomes more important.