Article ID: | iaor201112038 |
Volume: | 42 |
Issue: | 4 |
Start Page Number: | 859 |
End Page Number: | 888 |
Publication Date: | Nov 2011 |
Journal: | Decision Sciences |
Authors: | Wagner Stephan M, Niranjan Tarikere T, Bode Christoph |
Keywords: | decision theory, demand |
The beer game and the supply line underweighting theory are central to our knowledge of decision making in dynamic environments such as supply chains. The core of these theories is that people are incapable of recognizing the pipeline inventory and this is the main cause of overordering and dysfunctional behavior. This article identifies lacunae in the theoretical and empirical foundations of extant literature and proposes an alternate explanation, a ‘correction model,’ explaining why overreactions occur. We adopt a multi-method research design, comprising a field case study and laboratory experiments, to ground our findings.