Forecasting and inventory performance in a two-stage supply chain with ARIMA(0,1,1) demand: Theory and empirical analysis

► We are concerned with the issue of forecasting and inventory control in a two-stage supply chain (e.g. a manufacturer and a retailer). ► We consider the performance of the system under an ARIMA(0,1,1) demand process. ► We highlight the need to distinguish between the forecasting accuracy performance and that related to forecasting utility. ► We assess, both analytically and empirically, the profit related to forecast information sharing among a retailer and the manufacturer.