Managing forecast variability in a build-to-order environment

In any production environment, managing demand variability is a delicate balancing act. Firms must constantly weigh potential obsolescence costs of unused inventory (should sales not materialize) against potential expedite costs or lost sales (should demand outpace available inventory). For build-to-order manufacturers such as Dell, the balancing act is even more challenging. While it offers a wide array of products, Dell does not hold its safety stock in the form of finished goods inventory. Instead, safety stock is held as parts inventory, sitting in supplier-owned supplier logistics centers. As a result, supplier stocking decisions may impact Dell's ability to respond to forecast variability. Other factors, such as globalization, product proliferation, and geo-manufacturing, all magnify the impact variability has on the forecasting process. This thesis discusses two methods of dealing with demand variability. First, it examines the potential application of statistical modeling techniques to the part-level forecasting process.

Department dc:contributor.department

Leaders for Manufacturing Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Author dc:creator

• Einhorn, Marshall

Advisor dc:contributor.advisor

• David E. Hardt and Roy E. Welsch.

• Sloan School of Management.
• Mechanical Engineering.
• Leaders for Manufacturing Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/39590

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/39590