Modelling of Speculative Ordering in Supply Chain

Abstract

In supply chain system, where the multiple companies are linked in series materially and informationally, the volatility appears not only in market demand but also in every stage of the chain. Apparently, such volatility reflects the psychological tendency of speculation by a retailer for example. This article tries to formulate the speculative ordering by Kalman Filter with multi-stage observer and proposes a concise method to reduce stock cost in the retailer.