Demand Forecast Analysis And Capacity Investment Decision And Coordination In Supply Chain Under The Environment Of Internet Of Things

Consumer demand uncertainty is enhanced by the diversity and individuation of consumer demand,the shortening of product life cycle and the increasing intensity of market competition.It challenges the operation and management of enterprises.Reducing the impact of demand uncertainty is conducive to enterprises and their supply chain to gain market competitive advantage.Response ability and flexibility will play a key role for an enterprise and its supply chain in coping demand uncertainty.The in-depth application of emerging information technologies,such as Internet of Things,Big Data,Cloud Computing and others in the industries of retailing and manufacturing,will provide new opportunities for the enterprises and supply chains to cope with uncertain demand.This study first analyzes the single firm's measures to deal with demand uncertainty in the supply chain,and then analyzes the joint decisions and coordination mechanisms when they both invest in the measures.The main research contents are as follows:First,the retailer's decisions of information sharing and demand forecast investment.For a retailer,it can either share information with other retailers,or share with its upstream manufacturer.That is to say,information sharing in supply chain can occur in horizontal and vertical structure.1)Information sharing under horizontal structure.Retailers with different forecasting accuracy,especially for the low accuracy one,will have incentives to improve demand forecasting by forming information sharing alliance.Results show that information sharing will reduce competition intensity and improve the demand forecast,and thus improve their expected profits;competition intensity,forecast accuracy differences and demand uncertainty have positive impacts on the value of information sharing.2)Information sharing under vertical structure.The retailer with private information can also share information with its upstream manufacturer.The results show that,under exogenous prediction accuracy,decentralized decision-making of the two firms will not reduce the value of information,but information sharing will do;and under endogenous prediction accuracy,information sharing will result in more serious loss of information value than situation with exogenous forecast accuracy,and the forecast investment is inefficient.Second,the manufacturer's decisions of volume flexibility capacity investment and capacity expansion.Manufacturer's direct investment in volume flexibility capacity,orcapacity expansion based on existing capacity,can improve its ability to cope with demand uncertainty,or demand change,and to delivery order.1)Volume flexibility capacity investment in a two-stage supply chain.In the decentralized supply chain structure,each enterprise will only maximize its own profit.Therefore,the double marginalization effect will lead to a low efficiency of the supply chain,that is,volume flexibility capacity cannot fully play the role of coping with the demand uncertainty.Based on this problem,a coordination contract of “subsidy for residual unit and penalty to stockout” is designed.2)Capacity expansion decision in a two-stage supply chain.Facing the retailer's promotion efforts,the manufacturer needs to decide whether to expand its capacity and how much to expand,based on its existing capacity.Due to the low efficiency of supply chain under decentralized decision-making,a coordination contract of “promotion effort cost sharing and revenue sharing” is designed and the corresponding numerical analysis is made.Third,the joint investment decisions of demand forecasting and flexible capacity in the supply chain.Both of the supply chain members have incentives to take measures to deal with demand uncertainty.However,only if the objectives of the two enterprises are consistent,can the two measures play the best role in dealing with demand uncertainty.The manufacturer's flexible capacity can improve the order delivery and customer satisfaction,but it will suffer from the friction cost because of capacity adjustment.The retailer,investing in demand forecasting,only maximize its own interests,without considering the friction cost suffered by the manufacturer.Although by sharing information,the manufacturer can improve its flexible capacity investment to mitigate the friction cost,it cannot force the retailer to further investment in improving the prediction accuracy.Based on this problem,a“cost and revenue sharing” contract is designed to coordinate the decisions of the two firms,and the supply chain efficiency is improved.The contract structure can provide references to implement Internet of Things projects for the supply chains.