Bullwhip Effect of Multiple Products with Interdependent Product Demands

Srinivasan Raghunathan (), Christopher S. Tang () and Xiaohang Yue ()
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Srinivasan Raghunathan: The University of Texas at Dallas
Christopher S. Tang: UCLA Anderson School
Xiaohang Yue: The University of Wisconsin-Milwaukee

A chapter in Handbook of Ripple Effects in the Supply Chain, 2019, pp 145-161 from Springer

Abstract: Abstract The bullwhip effect has been studied extensively by researchers using analytical and empirical models based on a single product. We extend the current theory to provide insights for a firm that manufactures multiple products in a single product category with interdependent demand streams. We find that interdependency between demand streams plays a critical role in determining the existence and magnitude of the bullwhip effect. More importantly, we show that interdependency impacts whether the firm should manage ordering and inventory decisions at the category level or at the product level, and whether the bullwhip effect measure computed at the category level is informative or not.

Date: 2019
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DOI: 10.1007/978-3-030-14302-2_7

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