Demand Forecasting Method Based on Stochastic Processes and Its Validation Using Real-World Data
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Demand forecasting problems frequently arise in logistics and supply chain management. The Newsboy Problem is one such problem. In this paper, we present an improved solution method using application of the Black–Scholes model incorporating stochastic processes used in financial engineering for option pricing. Through numerical experiments using real-world data, the proposed model is demonstrated to be effective.
KeywordsOption Price Supply Chain Management Segment Length Wholesale Price Demand Forecast
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