Bullwhip - Rev. 3/05 Information Distortion And the...

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Hau Lee / Warren Hausman Page No. 1 Hau L. Lee Stanford University (used with permission) Information Distortion And the Bullwhip Effect Rev. 3/05
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Hau Lee / Warren Hausman Page No. 2 Increasing Variability of Orders Up the Supply Chain Consumer Sales 0 5 10 15 20 Time Order Quantity Retailer Orders to Wholesalers 0 5 10 15 20 Time Order Quantity Wholesaler Orders to Manufacturer 0 5 10 15 20 Time Order Quantity Manufacturer Orders to Supplier 0 5 10 15 20 Time Order Quantity
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Hau Lee / Warren Hausman Page No. 3 Information Distortion: The Bullwhip Effect • Order variability is amplified up the supply chain: upstream is worse. • What you see is not what they face. • Bullwhip, whip-saw, whip-lash effect; or acceleration principle.
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Page No. 4 Bullwhip in Electronics Industry week 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Peripheral Product Consumables week 0 50,000 100,000 150,000 200,000 250,000 300,000
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Bullwhip - Rev. 3/05 Information Distortion And the...

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