Quantifying the bullwhip effect in a simple supply chain: The Impact of forecasting, lead times, and information

Quantifying the bullwhip effect in a simple supply chain: The Impact of forecasting, lead times, and information

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Article ID: iaor200162
Country: United States
Volume: 46
Issue: 3
Start Page Number: 436
End Page Number: 443
Publication Date: Mar 2000
Journal: Management Science
Authors: , , ,
Keywords: forecasting: applications, supply
Abstract:

An important observation in supply chain management, known as the bullwhip effect, suggests that demand variability increases as one moves up a supply chain. In this paper we quantify this effect for simple, two-stage supply chains consisting of a single retailer and a single manufacturer. Our model includes two of the factors commonly assumed to cause the bullwhip effect: demand forecasting and order lead times. We extend these results to multiple-stage supply chains with and without centralized customer demand information and demonstrate that the bullwhip effect can be reduced, but not completely eliminated, by centralizing demand information.

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