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Chapter 17: Problem 9

What are the four main causes of the bullwhip effect in multiechclon supply chains? Which causes are likely to have the largest effect in each of the following systems? a. A consumer products distribution network, consisting of the manufacturing plant, regional warehouses, and retail outlets. b. A spare parts network, consisting of a main distribution center, regional facilities, and customer sites. c. A military supply network, consisting of a central warehouse, regional depots, and field usage sites.

Short Answer

Expert verified
a. A consumer products distribution network b. A spare parts network c. A military supply network Answer: a. In a consumer products distribution network, the largest effect on the bullwhip effect is likely due to demand forecasting update. b. In a spare parts network, the largest effect on the bullwhip effect is likely due to order batching. c. In a military supply network, the largest effect on the bullwhip effect is likely due to rationing and shortage gaming.

Step by step solution

01

Identify the four main causes of the bullwhip effect in multi-echelon supply chains

The four main causes of the bullwhip effect are: 1. Demand forecasting update 2. Order batching 3. Price fluctuation 4. Rationing and shortage gaming
02

Understanding the consumer products distribution network

A consumer products distribution network consists of a manufacturing plant, regional warehouses, and retail outlets. The largest effect in this system is likely to be caused by demand forecasting update as the consumer demand is often changing and difficult to predict accurately.
03

Applying the causes to the consumer products distribution network

In the case of a consumer products distribution network, the largest effect is likely due to: - Demand forecasting update: In this system, the customer demand can frequently change, leading to inaccurate predictions which contribute significantly to the bullwhip effect.
04

Understanding the spare parts network

A spare parts network consists of a main distribution center, regional facilities, and customer sites. In this system, the largest effect is likely to be caused by order batching, as companies tend to order spare parts in large quantities to take advantage of discounts or to meet minimum order quantities.
05

Applying the causes to the spare parts network

In the case of a spare parts network, the largest effect is likely due to: - Order batching: Companies order in large quantities to avail discounts or meet minimum order quantities, causing an increase in variability in demand and the bullwhip effect.
06

Understanding the military supply network

A military supply network consists of a central warehouse, regional depots, and field usage sites. In this system, the largest effect is likely to be caused by rationing and shortage gaming, as there might be limited resources and strict allocation policies.
07

Applying the causes to the military supply network

In the case of a military supply network, the largest effect is likely due to: - Rationing and shortage gaming: Limited resources and strict allocation policies lead to gaming behaviors such as over-ordering to ensure sufficient supply, which in turn exacerbates the bullwhip effect.
08

Conclusion

To conclude, the four main causes of the bullwhip effect in multi-echelon supply chains are: 1. Demand forecasting update 2. Order batching 3. Price fluctuation 4. Rationing and shortage gaming The largest effect for each system is: a. Consumer products distribution network - Demand forecasting update b. Spare parts network - Order batching c. Military supply network - Rationing and shortage gaming

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Most popular questions from this chapter

Suggest appropriate performance measures for evaluating the efficiency of raw materials, WIP, I'Gl, and spare parts in a manufacturing system.

In general, WIP reduction techniques are also lead time reduction techniques, but the reverse is not always true. List some lead time reduction techniques that do not reduce WIP.

Why might the EOQ model be better-suited to purchased parts than to internally manufactured products?

List some supply chains in which holding the bulk of the stock at the demand level (e.g., at retail outlets) and making use of lateral transshipments might make sense.

How can cycle time reduction reduce raw materials, WIP, and FGI?
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