Quantifying the Bullwhip E ect in a Simple Supply Chain : The Impact of Forecasting , Lead Times and Information

An important observation in supply chain management, known as the bullwhip eeect, suggests that demand variability increases as one moves up a supply chain. In this paper we quantify this eeect for simple, two-stage, supply chains consisting of a single retailer and a single manufacturer. Our model includes two of the factors commonly assumed to cause the bullwhip eeect: demand forecasting and order lead times. We extend these results to multiple stage supply chains with and without centralized customer demand information and demonstrate that the bullwhip eeect can be reduced, but not completely eliminated, by centralizing demand information.