An evaluation of the economic cost impacts of classical forecast errors

Elegbede, Shafi Ajibade (2022). An evaluation of the economic cost impacts of classical forecast errors. University of Birmingham. Ph.D.

Preview

Elegbede2022PhD.pdf
Text - Accepted Version
Available under License All rights reserved.
Download (2MB) | Preview

Abstract

Evidence from literature suggests that there is no shortage of studies concerned with the supply chain risk management and the associated performance by the individual echelons and functional business areas or through coordinated efforts. Literature has also demonstrated strong association between the performance of supply chain inventory management and control policies and profitability. Thus, integration of operational policies with financial decisions has been seen as an avenue to improve and to better corporate strategic financial objectives in supply chain sector organisations through optimal inventory investment. This is quite important since measures to improve financial performance implicitly influence and restrict operational performance including the management of inventory. However, on the modelling of inventory and finance and in measuring the impact of one on the other, traditional approaches tend to think of one as the input into the other without due consideration for the interconnections between the two over time. In particular, the traditional inventory cost model appears to present a disconnect between operational choices and financial decisions.
This thesis models both and their interconnections explicitly and simultaneously. Supposing a periodic review inventory policy with finite horizon and single perishable product, this study proposes a simple easy to understand solution. Specifically, in evaluating the economic consequences of classical forecast error metrics on inventory control system, study improves the current approach by creating a versatile consolidative costs evaluation function that aligns both operational and financial decisions as well as captures the business contextual considerations. The research study results revealed that we can easily utilise the proposed robust costs structure at the right scale (of demand uncertainty) and in the right scope (of financial capacity) to reveal the real and correct cost effects that facilitates users to produce practically feasible plans for their businesses.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):