The bullwhip effect - Impact of stochastic lead time, information quality, and information sharing: A simulation study

Dean C. Chatfield, Jeon G. Kim, Terry Paul Harrison, Jack C. Hayya

Research output: Contribution to journalReview article

251 Scopus citations

Abstract

We use a simulation model called 'SISCO' to examine the effects in supply chains of stochastic lead times and of information sharing and quality of that information in a periodic order-up-to level inventory system. We test the accuracy of the simulation by verifying the results in Chen et al. (2000a) and Dejonckheere et al. (2004). We find that lead-time variability exacerbates variance amplification in a supply chain, and that information sharing and information quality are highly significant. For example, using the assumptions in Chen et al. (2000a) and Dejonckheere et al. (2004), we find in a numerical experiment of a customer-retailer-wholesaler-distributor-factory supply chain that variance amplification is attenuated by nearly 50 percent at the factory due to information sharing. Other assumptions we make are based on interviews or conversations with managers at large supply chains.

Original languageEnglish (US)
Pages (from-to)340-353
Number of pages14
JournalProduction and Operations Management
Volume13
Issue number4
StatePublished - Dec 1 2004

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All Science Journal Classification (ASJC) codes

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

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