Intuitively, we might think that a multi-product company capable of forecasting the structure of demand does not need to protect itself against risks of stock shortages due to demand variability since demand is foreseeable. Similarly, it seems intuitive to think that a multi-product firm with sufficient inventories does not need to anticipate the structure of demand. On that basis, demand forecasting tools and stockpiling would seem to be substitutable. This article calls into question this intuitive proposal since we demonstrate with the help of a heuristic model that stockpiling and demand forecasting tools can be complementary instruments for companies depending on the nature of demand.
Keywords
- Demand Forecasting Tools
- Stockpiling
- Strategic Complementarity
- Strategic Substitutability