TY - JOUR
T1 - Purchase contract management with demand forecast updates
AU - Huang, Hongyan
AU - Sethi, Suresh P.
AU - Yan, Houmin
PY - 2005/8
Y1 - 2005/8
N2 - We study a two-stage purchase contract with a demand forecast update. The purchase contract provides the buyer an opportunity to adjust an initial commitment based on an updated demand forecast obtained at a later stage. An adjustment, if any, incurs a fixed as well as a variable cost. Using a dynamic programming formulation, we obtain optimal solutions for a class of demand distributions. We also discuss how these results can be applied to gain managerial insights that help in making decisions regarding where to allocate efforts in improving the forecast quality and whether or not to sign a contract. Copyright © "IIE".
AB - We study a two-stage purchase contract with a demand forecast update. The purchase contract provides the buyer an opportunity to adjust an initial commitment based on an updated demand forecast obtained at a later stage. An adjustment, if any, incurs a fixed as well as a variable cost. Using a dynamic programming formulation, we obtain optimal solutions for a class of demand distributions. We also discuss how these results can be applied to gain managerial insights that help in making decisions regarding where to allocate efforts in improving the forecast quality and whether or not to sign a contract. Copyright © "IIE".
UR - http://www.scopus.com/inward/record.url?scp=22944477701&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-22944477701&origin=recordpage
U2 - 10.1080/07408170590961157
DO - 10.1080/07408170590961157
M3 - RGC 21 - Publication in refereed journal
SN - 0740-817X
VL - 37
SP - 775
EP - 785
JO - IIE Transactions (Institute of Industrial Engineers)
JF - IIE Transactions (Institute of Industrial Engineers)
IS - 8
ER -