Evolution of ARMA demand in supply chains

Evolution of ARMA demand in supply chains

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Article ID: iaor200532
Country: United States
Volume: 6
Issue: 2
Start Page Number: 195
End Page Number: 198
Publication Date: Mar 2004
Journal: Manufacturing & Service Operations Management
Authors:
Keywords: supply chain, ARIMA processes
Abstract:

This paper shows that an ARMA demand generates an ARMA order history when ordering decisions are made based on an order-up-to policy. The order history preserves the autoregressive structure of the demand and transforms its moving average structure according to a simple algorithm. I apply this ARMA-in–ARMA-out property to examine the evolution of the demand signal in supply chains. Its practical implications are discussed in the context of quantifying the bullwhip effect, coordinating forecasting, and evaluating information sharing.

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