Mail-Order Demands for Style Goods: Theory and Data Analysis

Warren H. Hausman and Richard St.G. Sides
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Warren H. Hausman: Graduate School of Management, University of Rochester, Rochester, New York
Richard St.G. Sides: Hood Sailmakers, Inc., Marblehead, Massachusetts

Management Science, 1973, vol. 20, issue 2, 191-202

Abstract: A number of alternative data-generating processes are explored for mail-order demands for seasonal style-goods. Weekly demands for 126 items over an 18-week selling season provide the empirical data. Arguments are presented which result in the following candidates for data-generating processes: (1) ratios of successive forecasts are distributed lognormally; (2) ratios of successive forecasts are distributed as t (Student); (3) actual demands during unequal time periods are distributed as negative binomial. Analysis of the data suggests the negative binomial data-generating process as both most closely representing the underlying process and being simple to adapt to a decision model. The paper concludes with an example of the use of the chosen data-generating process in a decision framework, and deals briefly with some issues of implementation.

Date: 1973
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:20:y:1973:i:2:p:191-202

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