On net stock amplification in the Damped Trend Order-Up-To system


In this paper we characterize the frequency response of net stock amplification when the Damped Trend forecasting is used in the Order-Up-To replenishment policy. We prove that the invertibility regions from forecasting perspective are identical to the stability regions in control theory. From these stable and invertible regions, we explore the desirable parameter regions that the forecasting and inventory control policy is able to avoid the bullwhip effect and reduce net stock amplification for any lead-times. The simulations of 62 sets of real-world demand verify our analytical results.

Proceedings of the 6th International Conference on Industrial Engineering and Systems Management, Seville, Spain, 21st-23rd October, 322-328