Experimental economics and supply-chain management

Experimental economics and supply-chain management

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Article ID: iaor200412
Country: United States
Volume: 32
Issue: 5
Start Page Number: 74
End Page Number: 82
Publication Date: Sep 2002
Journal: Interfaces
Authors: ,
Keywords: inventory, production
Abstract:

One area in which experimental economics methods have been used to study operations problems is supply-chain management. We survey results from a series of human experiments based on the popular beer distribution game and find cognitive limitations on the part of managers, in particular an underweighting of the supply line. We suggest mechanisms that may alleviate this bias, including sharing inventory and point-of-sale data, and reducing ordering and shipping delays. Our research provides managerial lessons and identifies supply-chain issues that need further experimental study.

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