De waarde van informatie - The Bullwhip effect - The impact of centralized information on the bullwhip effect

8 important questions on De waarde van informatie - The Bullwhip effect - The impact of centralized information on the bullwhip effect

What can reduce the bullwhip effect?

One of the most frequent suggestions for reducing the bullwhip effect is to centralize demand information within a supply chain, that is, to provide each stage of the supply chain with complete information on the actual customer demand.

Between which two types of supply chain can we distinguish to determine the impact of demand information on the bullwhip effect?

  1. Supply chain with centralized demand information
  2. Supply chain with decentralized demand information

Describe the first stage in a centralized supply chain.

The retailer is the first stage and he observes customer demand, forecasts the demand mean and variance using a moving average with p demand observations, finds his target inventory level (base-stock) based on the forecast mean and variance of demand and places an order to the whole-saler.
  • Higher grades + faster learning
  • Never study anything twice
  • 100% sure, 100% understanding
Discover Study Smart

How do the stages within a centralized supply chain look alike?

Each stage of the supply chain receives the retailer's forecast mean demand and follows a base-stock inventory policy based on this mean demand.

What can we see with the variance of orders places by a given stage of a supply chain?

The variance of the orders placed by a given stage of the supply chain is an increasing function of the total lead time between that stage and the retailer.

What does the retailer do in a decentralized supply chain?

The retailer does not make its forecast mean and variance of demand available to the remained of the supply chain.

What does the action of the retailer imply in a decentralized supply chain?

Each stage has to calculate their own mean and variance of demand as none receive this from the retailer.

Which two managerial insights can be concluded from the value of centralized information?

  1. Centralizing demand information can significantly reduce the bullwhip effect
  2. Centralizing demand information can significantly reduce, but will not eliminate, the bullwhip effect

The question on the page originate from the summary of the following study material:

  • A unique study and practice tool
  • Never study anything twice again
  • Get the grades you hope for
  • 100% sure, 100% understanding
Remember faster, study better. Scientifically proven.
Trustpilot Logo