Bull whip effect 3

However as the buyer can influence the supplier

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: who uses such information to develop her production plan. However, as the buyer can influence the supplier’ inventory decision by manipulating his forecasts, a potential incentive problem s lurks behind the QF contract. That is, the buyer has an incentive to induce the supplier to carry a high inventory (at her expense) by overstating the demand. In expectation of this strategic behavior, the supplier may not take the forecasts seriously. Thus, information sharing will not take place as an equilibrium. To overcome this problem, the QF contract is structured so that the buyer is allowed to make limited changes to the forecast quantities for future periods, and hence the term “quantity flexible.” 2.5. Production/Delivery Schedule 8 A manufacturer could make use of its supplier’ production or delivery schedule s to improve its own production schedule. For example, US auto companies have access to the production schedule for their orders at steel suppliers. A Taiwanese semiconductor manufacturer allows her global customers access to her production schedule. UPS receives delivery requirements information downloaded from MicroAge every two hours. SEJ’ trucking companies receive delivery requirements multiple times a day as an s advance notice for efficient scheduling of his fleet. Thus, information about input/job availability helps a buyer expand the planning horizon of his own production schedule. Also he can quote more accurate due dates to his customers. Similarly, production schedules at a manufacturing site can be useful inputs to the supplier in ensuring reliable resupply. Motorola, for example, has used a program called “Scheduling Sharing,” whereby computer and peripherals manufacturers that are the customers of Motorola’ chip division would share their production schedules with s Motorola. This enables Motorola to develop its own production plan, as well as to use the most cost-effective means to replenish the customers’ stockpiles so that their production schedule would not be disrupted by not having adequate chips. 2.6. Other Information Sharing Other examples of informati...
View Full Document

Ask a homework question - tutors are online