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The Bullwhip Effect in Expanded Supply Chains and the Concept of Cumulative Quantities

Wilmjakob Herlyn

A chapter in Innovative Methods in Logistics and Supply Chain Management: Current Issues and Emerging Practices, 2014, pp 515-530 from Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management

Abstract: The bullwhip effect is a recurring problem in expanded supply chains and one of the most discussed problems in the last years. The word "bullwhip" describes the increasing variability (amplitude) of demand in a supply chain. This logistic phenomenon is observed at the interfaces between the partners during the transition of demand. Many authors see the reason for the bullwhip effect in the distortion of information and the separate calculation of dependent demand. This paper investigates the question whether the concept of cumulative quantities can tackle or even avoid the bullwhip effect. First the concept of cumulative quantities and order calculation are explained. Then a common production and material flow structure of the expanded supply chain is defined that is mandatory for lead time calculation between preceding cumulative curves of dependent demand. The results are demonstrated on a chart by a simple example with a constant Master Production Program. Thereafter the constant Master Production Program is changed into a sporadic one and the consequences for the cumulative curves of dependent demand and order calculation are explained. Then some special factors like additional demand are analyzed that influence cumulative curves and order calculation in expanded supply chains. At least a resume is given and some conclusions are made.

Keywords: concept of cumulative quantities; preceding cumulative curves; bullwhip effect; expanded supply chains (search for similar items in EconPapers)
Date: 2014
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