Estimating demand variability and capacity costs due to social network influence: The hidden cost of connection

M. Menezes, J. G. da Silveira and Renato Guimaraes
Additional contact information
Renato Guimaraes: ICN Business School, LGIPM - Laboratoire de Génie Industriel, de Production et de Maintenance - UL - Université de Lorraine

Post-Print from HAL

Abstract: Widespread access to social networks has led to renewed interest in social network influence in competitive markets. Digital connections enable customers to choose products based not only on intrinsic preferences, but also on inner-circle signals and market share data. However, these influences may significantly increase variability and complexity in demand forecasting. We propose an analytical model to estimate demand based on these three factors of choice. We focus on extreme weights of each factor where the probability distribution is more easily described. Then, we build solution paths as weights depart from the extreme points. We show that beta-binomial distributions can better describe the probability distribution of demand, and provide the parameters of that distribution, for new products helping operations and supply chain managers to take into account risk when making strategic decisions. To the best of our knowledge, we propose the first model that incorporates those three factors of choice in demand forecast. We also explore extreme cases where choice is mostly determined by intrinsic preference rather than social influence, and vice versa.

Keywords: Demand; Networks; Social network; Capacity forecast (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in International Journal of Production Economics, 2018, 197, pp.317-329. ⟨10.1016/j.ijpe.2018.01.013⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01809945

DOI: 10.1016/j.ijpe.2018.01.013

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().