Bullwhip Effect - Bullwhip Effect Summery According to Makui Madad(2007 increasing variability of demand further upstream in the supply chain is

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

View Full Document Right Arrow Icon
Bullwhip Effect Summery According to Makui, & Madad (2007), increasing variability of demand further upstream in the supply chain is named bullwhip effect. In other words, the variability of the orders received by the supplier is greater than the demand variability observed by the buyer. Four major causes of the bullwhip effects are as follows: Demand forecast updating, order batching, price fluctuations, and rationing and shortage gaming (Makui, Madadi, & 2007). Explanation In a supply chain model which consists of the retailers, agents, distributors and manufacturers, the retailer makes an order by using the customer demand plus future need to the agent; the agent uses this order plus its future demand to decide its orders for the distributors, etc. In this process, the correct information and actual demand have been distorted, resulting in a huge error of the demand variability from the downstream to the upstream in the supply chain. The disharmony of information transported is the main reason for this effect (Ouyang, 2007). Comparison
Background image of page 1

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

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

This note was uploaded on 01/18/2011 for the course BUS 201 taught by Professor Marybethwhite during the Spring '08 term at University of South Florida - Tampa.

Page1 / 2

Bullwhip Effect - Bullwhip Effect Summery According to Makui Madad(2007 increasing variability of demand further upstream in the supply chain is

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