Reducing the bullwhip effect: Looking through the appropriate lens
Abstract
Demand amplification, now frequently referred to as bullwhip, is potentially a very costly phenomenon. It can lead to stock-outs, large and expensive capacity utilisation swings, lower quality products, and considerable production/transport on-costs as deliveries are ramped up and down at the whim of the supply chain. However, the detection of bullwhip depends on which lens is used. This in turn depends on the background and requirements of various players within the value stream. To gain insight into this scenario we exploit a relatively simple replenishment model. Because new and novel analytic solutions have been derived for all important performance metrics, comparison of the competing bullwhip measures is thereby greatly streamlined. In the complex real world the likelihood is that supply chains will generate even greater inconsistency between alternative variance, shock, and filter lens viewpoints.