Improving the supply chain performance: use of forecasting models versus early order commitments

This paper evaluates the impact of forecasting models and early order commi tment in a supply chain with one capacitated manufacturer and four retailer s under demand uncertainty. Computer simulation models were used to simulat e different demand forecasting and inventory replenishment decisions by the retailers as well as production decisions by the manufacturer under a vari ety of demand patterns and capacity tightness scenarios. This study found t hat early order commitments significantly affected the total costs and serv ice levels, to various degrees, for the manufacturer and the retailers, sug gesting that the benefits of early order commitment could be influenced by a combination of forecasting models, demand patterns and capacity tightness .