Bullwhip Effect
What 6 things can the bullwhip effect result in?
-High buffer inventories -Bad customer service -Missed Production Schedules -Wrong capacity -Insufficient Shipping -High Costs
What is the cause of the bullwhip effect?
It is created when the supply chain members make ordering decisions with an eye to their own self interest and they don't have accurate demand information
What does one branch of the supply chain do if they are uncertain?
Stockpile extra inventory (Create a security blanket)
What is the bullwhip effect?
This is what occurs when slight demand variability is magnified as information moves back upstream
Why is transparency important in a supply chain?
Members of the supply chain have access to information which eliminates uncertainty
How can you cope with the bullwhip effect?
Share information in the supply chain, especially demand forecasts