Managing Short Life-Cycle Technology Products for Agere Systems

S. David Wu · Berrin Aytac · Rosemary T. Berger · Chris A. Armbruster

50 citations0/0 files storedINFORMS Journal on Applied Analytics

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Forecasting Techniques and Applications Supply Chain and Inventory Management Innovation Diffusion and Forecasting

Abstract

Over the past decade, the high-tech industry has been rapidly innovating technology and introducing new products. Firms have moved from vertically integrated operations to horizontally integrated operations that include contract manufacturers. In September 2002, Agere Systems recognized that it needed new tools for managing the capacity in its increasingly complex, global supply chain. Agere and the Center for Value Chain Research at Lehigh University formed a team to develop new methods for characterizing the demands for short life-cycle technology products. The team developed a leading-indicator engine that identifies products that provide advanced warning of demand changes for a group of products. For a data set including 3,500 semiconductor products, the analysis identified leading indicators that predicted the demand pattern of the product group one to seven months ahead of time with correlation values ranging from 0.51 to 0.95. The leading-indicator concept provides a new perspective on demand forecasting and can be extended to other corporate planning functions, such as financial forecasting and inventory forecasting.

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