1. Supply Chain Management: Issues and Models Lecture 4: Bullwhip Effect
Prof. Dr. Jinxing Xie
Department of Mathematical Sciences
Tsinghua University, Beijing , China
math.tsinghua.edu.cn
Voice: (86-10) Fax: (86-10)
Office: Rm. 1308, New Science Building

2. 牛鞭效应（例） i) Barilla (意大利面条制造商) ii) P & G 信息流 物流 工厂 销售总公司 分销商 零售商 顾客 P&G
批发商 3M
(胶带)
信息流 物流
ii) P & G
牛鞭效应（例）

3. Amplified Demand Distortion (the Bullwhip Effects)

4. Four sources of the bullwhip effect: Demand signal processing Rationing game Order batching Price variation

5. Bullwhip Effect: An Analytical Model

6. Bullwhip effect

7. Events in each period

8. Variables

9. Demand Process

11. Results for demand signal processing

14. Optimal order-up-to level

15. Optimal order quantity

16. Amplification of order variance

17. Summary Bullwhip effect exists even when the leadtime is zero
Other causes of bullwhip effects: omitted here
Sharing information is needed?

18. Information sharing: Value of information

19. Basic Assumptions
Supplier
(Manufacturer)
Retailer
Demand
The demand is assumed to be a simple autocorrelated AR(1) process
(2.1)
d > 0, -1<<1, and  is i.i.d. normally distributed with mean zero and variance 2.
<< d

20. Leadtimes

21. Retailer’s ordering decision process

22. Manufacturer’s decision

23. Retailer’s Leadtime Demand

24. Retailer’s Leadtime Demand

25. Retailer’s Ordering Decision

26. For manufacturer:

27. Manufacturer’s leadtime demand

28. Manufacturer’s leadtime demand: No information sharing

29. Manufacturer’s order-up-to level: No information sharing

30. Manufacturer’s leadtime demand: information sharing

31. Manufacturer’s order-up-to level: information sharing

32. Benefits of information sharing
Comparing (3.10) with (3.13), one can quantify the benefits of information sharing:
Inventory level;
Cost evaluation

33. Similar methods can be used to
Analyze the case when forecasting is used
Raghunathan S. “Information sharing in a supply chain: a note on its value when demand is non-stationary”. Management Science, April 2001,
Analyze the value of advance demand information (the value of time)
Zhao X., Xie J. and Wei J. The Impact of Early Order Commitment on the Performance of a Simple Supply Chain. Working paper, 2002, Chinese University of Hong Kong.