Demand and Forecasting

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Corporations are faced with increased pressure to deliver a large variety and volume of products efficiently to consumers. Market competition creates pressure to develop and release new or innovative products, which shorten the shelf life of products (Xiao, Jin, Chen, Shi, Xie, 2010). Shortened shelf life and increased demand presents a problem for supply chain managers. First, the timeline for production to market products is shortened (Eroglu, Williams & Waller, 2011). Second, market replenishment frequencies are increased (Hussian & Drake, 2011). Third, low-demand product turnover becomes costly, when high-demand heuristics and rules are applied to them (Syntetos & Keyes, 2009). The convergence of these factors requires stockists to make projections in uncertain conditions, where lead time increases . This paper aims to review principals and strategies for dealing with demand. Johnson and Boylan (1996) outline the key to customer service in meeting stock keeping unit (SKU) product demand, as breadth of products and depth of availability to meet demand. Syntetos & Keyes (2009) highlight managers contend with storage and manpower constraints, which are related to effective SKU management. Organization size is linked to the number of demand lines, and variety does not easily lend itself to effective SKU planning (Syntetos et al, 2009). Where corporate strategy is concerned, high emphasis placed on agile customer service or low cost efficient cost-leaders. Customers value these dimensions, because they are compatible with their goals. Supply chain interruptions are detrimental because they erode product or corporate brand loyalty (Eroglu et al, 2011). Competition on delivery speed impacts the corporate choice on make-to-order and make-to-stock strategies (Xiao et al, 2010). Ultimately, stock control becomes an extension of customer service, and how the corporation values that relationship (Syntetos et al, 2009). Demand is viewed in two ways first,...
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