Lecture Slides4_Value+of+Information

Lecture Slides4_Value+of+Information - The Value of...

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1 The Value of Information Copyright © 2011 Phil Kaminsky Phil Kaminsky kaminsky@ieor.berkeley .edu Introduction Value of using any type of information technology Potential availability of more and more information throughout the supply chain 1-2 Implications of this availability on effective design and management of the integrated supply chain Information Types Inventory levels Orders Production 1-3 Delivery status
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2 Value of Information “In modern supply chains, information replaces inventory” Why is this true? Why is this false? 1-4 Information is always better than no information. Why? What can “information” do for us? The Bullwhip Effect and its Impact on the Supply Chain Orders for a single color television model sold by a large electronics manufacturer to a national retailer. 1-5 Figure 1. Order Stream Huang at el. (1996), Working paper, Philips Lab Figure 2. Point-of-sales Data-Original The Bullwhip Effect and its Impact on the Supply Chain 1-6 Figure 3. POS Data After Removing Promotions
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3 The Bullwhip Effect and its Impact on the Supply Chain 1-7 Figure 4. POS Data After Removing Promotion & Trend Similarly Similarly –PCSales PC Sales 1-8 Lee, H, P. Padmanabhan and S. Wang (1997), Sloan Management Review Increasing Variability of Orders Up the Supply Chain 1-9 Lee, H, P. Padmanabhan and S. Wang (1997), Sloan Management Review
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4 Key Point Order variability is amplified up the supply chain; upstream echelons face higher variability. 1-10 If you’re a supplier, what you see is not what they face What are the Causes? Demand Forecasting Consider a Periodic review policy What happens as estimates of averages change? 1-11 How does longer leadtime “amplify” the increase in variability? What are the Causes? Lead Time 1-12
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5 What are the causes? Batch Ordering Consider a retailer who uses batch ordering… What does the wholesaler 1-13 What increases this effect?
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This note was uploaded on 04/25/2011 for the course IND ENG 153 taught by Professor Kaminsky during the Spring '11 term at University of California, Berkeley.

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Lecture Slides4_Value+of+Information - The Value of...

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