'I'm not hoarding, I'm just stocking up before the hoarders get here.' Behavioral causes of phantom ordering in supply chains

摘要

Purpose: To explore the extent to which hoarding and phantom ordering are behavioral phenomena. Summary: Hoarding, or attempts to accumulate large private stocks of goods when people perceive threats to supply, is closely related to phantom ordering in which people react to uncertain supply by ordering more than they actually desire. The phantom ordering remain persistent, destabilizing and costly phenomena in supply chains. They inflate backlogs, causing longer delivery times and smaller allocations, and intensify scarcity leaving suppliers with huge excess stocks, excess capacity and deep losses. There are two possible explanations offered for supply chain instability as a result of phantom ordering- operational (physical and institutional structure of supply chains) and behavioral (view people as boundedly rational actors with imperfect mental models of the environment who use heuristics to make decisions). The study explores the extent to which hoarding and phantom ordering are behavioral phenomena through an experimental study using the beer distribution game (BDG). Based on the data collected and reported by Croson, Donohue, Katok and Sterman (CDKS) (Ref. 1), the research work tries to examine phantom ordering. The CDKS experiment tried to establish the necessary conditions which are explained in detail to understand phantom ordering. The results of the experiment showed that a significant bullwhip effect and oscillations in nearly all cases. It was also found that customer demand was constant at four cases per week, 22% of participants order hundreds of cases at a time or more - more than 25 times larger than their common knowledge of the constant demand - even though doing so destabilizes the supply chain, raises costs and reduces their financial reward. To explore the role of behavioral processes in the BDG, various decision rules for participant orders were estimated. The results showed that 36% of participants engaged in statistically significant hoarding or phantom ordering. (74 refs.)