Asked by Julia Guerrero on Apr 27, 2024
Verified
Consider a supply chain where a manufacturer sells to a distributor who sells to a wholesaler who sells to a retailer. Last year, the retailer's weekly variance of demand was 4000 units. The weekly variance of orders was 5000; 8000; 12,000; and 17,000 units for the retailer, wholesaler, distributor, and manufacturer, respectively. (Note that the variance of orders equals the variance of demand for that firm's supplier.)
(a) Calculate the bullwhip measure for the retailer.
(b) Calculate the bullwhip measure for the wholesaler.
(c) Calculate the bullwhip measure for the distributor.
(d) Calculate the bullwhip measure for the manufacturer.
(e) Which firm appears to be contributing the most to the bullwhip effect in this supply chain?
Bullwhip Measure
A metric that quantifies the increase in variability or fluctuations in order and inventory levels observed as one moves up the supply chain from retailers towards manufacturers.
Supply Chain
The network of manufacturers, suppliers, and logistics providers involved in producing and delivering a product to the end user.
Variance
A statistical measure of the dispersion showing how much the values in a data set diverge from the mean or expected value.
- Understand the concept and calculation of the bullwhip effect in supply chains.
Verified Answer
TH
Tanner HearneApr 30, 2024
Final Answer :
(a) 5000 / 4000 = 1.25; (b) 8000 / 5000 = 1.6; (c) 12,000 / 8000 = 1.5; (d) 17,000 / 12,000 = 1.42
(e) With the highest bullwhip measure value of 1.6, the wholesaler appears to be contributing the most to the bullwhip effect in this supply chain.
(e) With the highest bullwhip measure value of 1.6, the wholesaler appears to be contributing the most to the bullwhip effect in this supply chain.
Learning Objectives
- Understand the concept and calculation of the bullwhip effect in supply chains.