Forecasting Methods to Reduce Inventory Level in Supply Chain

Based on the two-level supply chain composed of suppliers and retailers, we assume that market demand is subject to an ARIMA(1, 1, 1). The supplier uses minimum mean square error method (MMSE), simple moving average (SMA) weighted (WMA) respectively forecast demand. According statistical properties stationary time series, calculate between Through simulation, compare forecasting effects three methods analyse influence lead-time L parameter N prediction. results show effect MMSE best, WMA second, SMA last. also reducing increasing improve prediction accuracy reduce inventory level.