F-PSU 006-BusSimulation-BullwhipEffect

F-PSU 006-BusSimulation-BullwhipEffect - fluctuates between...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Tim Moran PSU 006 Supply Chain Simulation: Bullwhip Effect The supply chain simulation really opened my eyes to some of the problems presented to the world of business. It also enlightened me to one of the most important concepts in supply chain, called the Bullwhip Effect. The Bullwhip Effect describes a concept that is typical to all supply chains and regularly appears on supply chain graphs. What happens is that retailers, at the end of the line, are the first to see the demand rise for a product and in order to make up for the hole they fall into, increase their order. Along the line, the wholesaler recognizes the demand increase next, followed by the distributer, and then the factory that manufactures the product. Because it takes days for the orders to be processed and delivered, the demands would increase and each link would try to compensate for the inefficiency. This is why the supply graph
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: fluctuates between too much inventory and backlog. This fluctuation from positive to negative about the x-axis gives the Bullwhip Effect its name. In our zPOD game, this Bullwhip Effect was magnified for several reasons, including the that there was no communication between the any of the links in the chain, to go along with the fact that inexperienced people were controlling the supply chain links. If there was communication between the links, the retailer could tell the wholesaler that there was an increase in demand by a certain amount and then the wholesaler could relay that to the distributer who would relay it to the factory. The chain would run much more efficiently and would at least prevent ridiculous inefficiencies of excessive inventory or backlog. This would make the Bullwhip fluctuations less extreme and help business run more smoothly....
View Full Document

This note was uploaded on 03/30/2008 for the course PSU 006 taught by Professor Lambert,andrewna during the Fall '06 term at Penn State.

Page1 / 2

F-PSU 006-BusSimulation-BullwhipEffect - fluctuates between...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online