Comment on “Newsvendor Demand Chasing Revisited”

Based on a simulation, the authors of “Newsvendor Demand Chasing Revisited” recommended using correlation of orders with lagged demand to measure chasing behavior. They concluded that measuring chasing with regression based on partial adjustment is prone to false positives. We show the purported false positives are due to autocorrelation and recommend using partial adjustment regression-based approaches to evaluate chasing.

This paper was accepted by Jayashankar Swaminathan, operations management.