Michael Krapp, Johannes Nebel and Ramin Sahamie
The purpose of this paper is to provide a generic forecasting approach for predicting product returns in closed‐loop supply chains.
Abstract
Purpose
The purpose of this paper is to provide a generic forecasting approach for predicting product returns in closed‐loop supply chains.
Design/methodology/approach
The approach is based on Bayesian estimation techniques. It permits to forecast product returns on the basis of fewer restrictions than existing approaches in CLSC literature. A numerical example demonstrates the application of the proposed approach using return times drawn from a Poisson distribution.
Findings
The Bayesian estimation approach provides at least 50 percent higher accuracy in terms of error measures compared to traditional methods in all scenarios examined in the empirical part. Hence, more precise results can be obtained when predicting product returns.
Research limitations/implications
The flexibility of the proposed approach allows for numerous applications in the field of CLSC research. Areas that depend on the results from a forecasting system, such as inventory management, can embed our estimation procedure in order to reduce safety stocks. Further research should address the incorporation of the quality of returned products and its impact on the actual utilizable amount of product returns.
Originality/value
The generic character of the proposed forecasting approach leaves degrees of freedom to the user when adapting it to a specific problem. This adaptability is enabled by the following features: first, an arbitrary function is allowed for capturing the customers' demand. Second, the stochastic timeframe between sale and product return may follow an arbitrary distribution. Third, by adjusting two parameters finite as well as infinite planning horizons can be incorporated. Fourth, no assumptions regarding the joint distribution of product returns are necessary.
Details
Keywords
THOUGH rockets have aroused a good deal of public interest during the last few years and a great number of very interesting books and articles have been published about the…
Abstract
THOUGH rockets have aroused a good deal of public interest during the last few years and a great number of very interesting books and articles have been published about the theoretical side of this new science, little is generally known about the experimental progress that has been made, especially in Germany and the U.S.A. In describing this science—the Americans call it “rocketry”—as “new,” it is to be understood that this term applies only to the mathematics of it. The ordinary powder or “sky” rocket is by no means new, but has a long and very involved history, going back to Hassan Alrammah, called “nedshm‐eddin” (The Faithful) in A.D. 1280, who designed the first rocket‐driven torpedo. But though rockets in general (i.e. the powder rocket, which alone existed previous to 1929) have a history of almost a millennium and have even been of historical importance (Sir William Congreve's war‐rockets), the manufacturers of powder rockets knew nothing about their mathematics. When, for example, in 1928 the German Verein für Raumschiffahrt discussed the problem of exhaust velocities and impulses, its president, Johannes Winkler, asked the largest rocket factories about this information and received the answer that they did not know it and had no way of determining it. Winkler was therefore obliged to take the thrust‐diagram of a powder rocket himself (Fig. 1). This diagram revealed that the thrust of a sky‐rocket lasts for only two‐tenths of a second; this result was really amazing and the most amazed were the manufacturers of these rockets.