Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Related questions
Question
What is the bullwhip effect and how does it relate to lack off coordination in the supply chain?
Transcribed Image Text:**Understanding the Bullwhip Effect in Supply Chain Coordination**
**Introduction**
The bullwhip effect is a phenomenon in supply chain management where small fluctuations in demand at the consumer level cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and raw material supplier levels. This can lead to inefficiencies, such as excessive inventory, poor customer service, missed production schedules, and lost revenue.
**How It Relates to Lack of Coordination**
The bullwhip effect typically arises from a lack of coordination among the various participants in the supply chain. Key factors include:
1. **Demand Forecast Updates**: Each supply chain participant bases their forecasts on the order history from their immediate customer, not considering the entire chain, which amplifies demand variations.
2. **Order Batching**: Companies might batch orders to meet economies of scale requirements, leading to irregular order patterns.
3. **Price Fluctuations**: Promotions or discounts can lead to overbuying, followed by periods of no purchasing, which distorts the supply chain.
4. **Rationing and Shortage Gaming**: Anticipating shortages, businesses tend to over-order, which further distorts actual demand.
**Mitigating the Bullwhip Effect**
Improving communication, adopting better forecasting techniques, and using technology to share real-time data can help synchronize operations and reduce the bullwhip effect. Understanding and addressing these coordination challenges can lead to a more efficient and responsive supply chain.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 2 steps
Knowledge Booster
Similar questions
- Define the Bullwhip effect and what causes it. Also define strategies that are designed to reduce the bullwhip effect.arrow_forwardExplain the bullwhip effect in the context of supply chain management AND discuss how the consequences of the bullwhip effect may be reduced.arrow_forward12- The use of real time automated delivery notification systems for tracking and monitoring the delivery of products. ما أهمية است خدام التكنولوجا في تيع وصول البضائع Country A ! Country B Cargo at Shipper's Delivery Multimodal Transport Operator To Door Consignee 1. Main Transport Leg (Sea-Road- Rail-Air) Inland Customs Terminal Inland Customs Clearance Transport Clearance Activities Transport Define Cargo Define custom clearance Define the transportation Define automated delivery of product Determine the new trend technology in transportation Determine the new trends for tracking and monitoring the delivery of productsarrow_forward
- PP.71 A small manufacturer of specialty welding equipment has developed a combination production plan for the next four quarters, as seen below. Supply/Demand Info Pre-Q1 Q1 4,620 4,620 Forecast (demand) Regular production Subcontract production Ending inventory Hired employees Fired employees Total employees 42 42 Q2 Q3 Q4 4,730 5,390 5,170 5.080 5.060 5.080 330 4 46 The table below shows additional relevant information: Capacity Information & Cost Variables Production rate (units/employee/quarter) Subcontractor capacity (units/quarter) Regular production cost/unit Holding cost'unit/quarter Hiring cost/employee Firing cost/employee Subcontract cost/unit 110 480 $85 $13 $820 $2,150 $119 110 110 46 46 What is the overall total cost for this production plan? (Display your answer to the nearest whole number.) Number What is the total subcontract cost for this production plan? (Display your answer to the nearest whole number.) Number What is the total holding cost for this production plan?…arrow_forwardHow does lack of supply chain coordination contribute to the Bullwhip Effect?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education 
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.