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The value of inventory and the direction of the supply chain bullwhip effect

The value of inventory and the direction of the supply chain bullwhip effect The bullwhip effect (BWE) is the amplification of demand variability in a supply chain and can be quite costly for industry and society. In this empirical investigation of the BWE a three-stage supply chain is examined using monthly industry-level data. Time series regression equations are used to detect the BWE and its direction. Empirical evidence is found suggesting the BWE of a supply chain member is influenced by the BWE of the other members, as well as the values of inventory and inventory to sales ratios of own member and other members of supply chain. In addition, there is evidence that the direction of the BWE is not influenced by the members' horizontal positions in the network. It is shown that the wholesale BWE exhibits heteroscedastic and non-stationary behaviour; thus, making it difficult to predict over a long-horizon time period, unlike the BEW of the manufacturing and retail industries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Business and Systems Research Inderscience Publishers

The value of inventory and the direction of the supply chain bullwhip effect

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd
ISSN
1751-200X
eISSN
1751-2018
DOI
10.1504/IJBSR.2018.095070
Publisher site
See Article on Publisher Site

Abstract

The bullwhip effect (BWE) is the amplification of demand variability in a supply chain and can be quite costly for industry and society. In this empirical investigation of the BWE a three-stage supply chain is examined using monthly industry-level data. Time series regression equations are used to detect the BWE and its direction. Empirical evidence is found suggesting the BWE of a supply chain member is influenced by the BWE of the other members, as well as the values of inventory and inventory to sales ratios of own member and other members of supply chain. In addition, there is evidence that the direction of the BWE is not influenced by the members' horizontal positions in the network. It is shown that the wholesale BWE exhibits heteroscedastic and non-stationary behaviour; thus, making it difficult to predict over a long-horizon time period, unlike the BEW of the manufacturing and retail industries.

Journal

International Journal of Business and Systems ResearchInderscience Publishers

Published: Jan 1, 2018

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