Quantifying the bullwhip effect in a simple supply chain: the impact of forecasting, lead times, and information. (English) Zbl 1231.90019

Chen, Frank; Drezner, Zvi; Ryan, Jennifer K.; Simchi-Levi, David

Manage. Sci. 46, No. 3, 436-443 (2000).

Summary: 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.

MSC:

90B05

Inventory, storage, reservoirs

Keywords:

bullwhip effect; forecasting; information; inventory; lead time; supply chain variability