Apply 3C Theory in Collaborative Planning, Forecasting, and Replenishment Expert System Formulation

In recent years, both the VICS CPFR committee and ECR Europe have published several reports presenting pilot implementations of the CPFR process model and providing recommendations and roadmaps for companies interested in implementing it. These sources indicate that by implementing CPFR both retailers and suppliers can expect to benefit from increased forecast accuracy, reduced stock-outs, increased sales, and reduced inventories. Based on the commonality, capacity and consumption (3C Theory) of a specific material, a GARCH based collaborative planning, forecasting, and replenishment (CPFR) expert system associated with 3C Theory is proposed in this paper. Meanwhile, through setting an optimal safety multiplier in exception policy, an exception demand also can be efficiently and effectively controlled to maximize the net present value. Keyword: Collaborative Planning, Forecasting, Replenishment (CPFR), GARCH Model, Expert System, 3C Theory