Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times, and Information

Frank Chen (), Zvi Drezner (), Jennifer K. Ryan () and David Simchi-Levi ()
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Frank Chen: Decision Sciences Department, National University of Singapore, 119260 Singapore
Zvi Drezner: Department of MS ... IS, California State University, Fullerton, California 92834
Jennifer K. Ryan: School of Industrial Engineering, Purdue University, West Lafayette, Indiana 47907
David Simchi-Levi: Department of IE ... MS, Northwestern University, Evanston, Illinois 60208

Management Science, 2000, vol. 46, issue 3, 436-443

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.

Keywords: bullwhip effect; forecasting; information; inventory; lead time; supply chain; variability (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (292)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:46:y:2000:i:3:p:436-443

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