Question

The bullwhip effect is a concept for explaining inventory fluctuations or inefficient asset allocation as a result of demand changes as you move further up the supply chain. What do you think the main causes of bullwhip effect? What can a firm do to minimize demand distortions across the chain? (Consider a computer manufacturing firm)

Answer 1

Answer:

The bullwhip effect refers to the phenomenon where order variability increases as the orders move upstream in the supply chain. This paper provides a review of the bullwhip literature which adopts empirical, experimental and analytical methodologies. Early econometric evidence of bullwhip is highlighted. Findings from empirical and experimental research are compared with analytical and simulation results. Assumptions and approximations for modelling the bullwhip effect in terms of demand, forecast, delay, replenishment policy, and coordination strategy are considered. We identify recent research trends and future research directions concerned with supply chain structure, product type, price, competition and sustainability.