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The bullwhip effect on inventory under different information sharing settings based on price-sensitive demand

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  • Nengmin Wang
  • Jizhou Lu
  • Gengzhong Feng
  • Yungao Ma
  • Huigang Liang

Abstract

Information sharing (IS) is proved to be a valid method to counter demand variability amplification along the supply chain, or bullwhip effect (BWE). Different from the traditional way of measuring the BWE based on order quantity, we measure the BWE on inventory in different IS settings and try to find the best IS approach. In this paper, the retailer will face the market demand which is price-sensitive, and the price follows a first-order autoregressive process. This demand model includes some indexes that can provide more useful managerial insights than previously studied parameters. Our study identifies the best IS setting under any conditions, and clarifies that the benefits of IS will be evident when the overall market product pricing process is highly correlated over time, the demand shocks to the retailer are high, the price sensitivity coefficient is small, the overall market shocks are low, the retailer’s lead-time is long and the manufacturer’s lead-time is short.

Suggested Citation

  • Nengmin Wang & Jizhou Lu & Gengzhong Feng & Yungao Ma & Huigang Liang, 2016. "The bullwhip effect on inventory under different information sharing settings based on price-sensitive demand," International Journal of Production Research, Taylor & Francis Journals, vol. 54(13), pages 4043-4064, July.
    • Handle: RePEc:taf:tprsxx:v:54:y:2016:i:13:p:4043-4064
    DOI: 10.1080/00207543.2016.1171418
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    Cited by:

    1. Pastore, Erica & Alfieri, Arianna & Zotteri, Giulio, 2019. "An empirical investigation on the antecedents of the bullwhip effect: Evidence from the spare parts industry," International Journal of Production Economics, Elsevier, vol. 209(C), pages 121-133.
    2. Chiang, Chung-Yean & Qian, Zhuang & Chuang, Chia-Hung & Tang, Xiao & Chou, Chia-Ching, 2023. "Examining demand and supply-chain antecedents of inventory dynamics: Evidence from automotive industry," International Journal of Production Economics, Elsevier, vol. 259(C).
    3. Lina Tang & Taho Yang & Yiliu Tu & Yizhong Ma, 2021. "Supply chain information sharing under consideration of bullwhip effect and system robustness," Flexible Services and Manufacturing Journal, Springer, vol. 33(2), pages 337-380, June.
    4. Roberto Dominguez & Salvatore Cannella & Borja Ponte & Jose M. Framinan, 2022. "Information sharing in decentralised supply chains with partial collaboration," Flexible Services and Manufacturing Journal, Springer, vol. 34(2), pages 263-292, June.
    5. Nguyen, Duy Tan & Adulyasak, Yossiri & Landry, Sylvain, 2021. "Research manuscript: The Bullwhip Effect in rule-based supply chain planning systems–A case-based simulation at a hard goods retailer," Omega, Elsevier, vol. 98(C).
    6. Zhu, Tianyuan & Balakrishnan, Jaydeep & da Silveira, Giovani J.C., 2020. "Bullwhip effect in the oil and gas supply chain: A multiple-case study," International Journal of Production Economics, Elsevier, vol. 224(C).
    7. Lu, Jizhou & Feng, Gengzhong & Shum, Stephen & Lai, Kin Keung, 2021. "On the value of information sharing in the presence of information errors," European Journal of Operational Research, Elsevier, vol. 294(3), pages 1139-1152.
    8. Ojha, Divesh & Sahin, Funda & Shockley, Jeff & Sridharan, Sri V., 2019. "Is there a performance tradeoff in managing order fulfillment and the bullwhip effect in supply chains? The role of information sharing and information type," International Journal of Production Economics, Elsevier, vol. 208(C), pages 529-543.
    9. Wang, Qianwen & Liu, Xu & Huo, Baofeng & Zhao, Xiande, 2023. "Economic or relational first? Establishing the competitiveness of third-party logistics information sharing by devoting specific assets and mutual trust," International Journal of Production Economics, Elsevier, vol. 261(C).

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