Qualifying the Bullwhip Effect in a Two-level Supply Chain: The Value of Demand Information Sharing

摘要

An important phenomenon called bullwhip effect suggests that demand variability increases as one moves up a supply chain. In this paper, we put forward a two-level supply chain model consisting of a manufacturer and a retailer which assume that retailer's demand is a AR(1) process. We try to qualify the bullwhip effect in the course of demand information forecasting and processing demand information. In the course of processing demand information, we analyze the bullwhip effect in the condition of no demand information sharing and information sharing. The value of demand information sharing will be very high when demands are significantly correlated over time.